By Barbara Kollmeyer
The FTSE 100 joined in on the second-day of a rally for global equities on Wednesday, with heavily weighted resource stocks surging and signs of an ease in government borrowing.
The index /zigman2/quotes/210598409/delayed UK:UKX -0.70% rose 1.5% to 6,966.33, after a 0.5% gain the prior session and a 2.3% slump on Monday, which marked the biggest drop for the FTSE 100 since May. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2937% was largely flat against the dollar.
Another move up for global stocks took other assets along, such as oil prices /zigman2/quotes/209723049/delayed CL00 +2.14% , gaining over 1% as the commodity rose for a second day in a bid to recoup Monday’s sharp losses. Shares of BP /zigman2/quotes/207305210/composite BP -0.85% /zigman2/quotes/202286639/delayed UK:BP +0.68% and Royal Dutch Shell /zigman2/quotes/205095589/composite RDS.A -1.07% /zigman2/quotes/206428183/delayed UK:RDSA +0.73% climbed more than 2% each.
U.K. government figures showed that net borrowing in June dropped by £5.5 billion ($7.48 billion), or 19.4%, versus the previous month, with the driver on the revenue side as total receipts rose 18%, pointed out analysts at Investec Economics.
“Overall, although public sector net borrowing remains extraordinarily high from a historical prospective, it is a marked improvement from last year’s figures, in which PSNBx (public sector net borrowing excluding banks) peaked above £47 billion in April 2020,” said Investec analyst Ellie Henderson. An economic recovery since then has helped boost tax revenues and reduced government spending on COVID-19 pandemic programs, she said.
Among stocks on the move, shares of Next /zigman2/quotes/200704121/delayed UK:NXT -0.52% surged 6%, after the clothing retailer lifted fiscal 2021 profit guidance and declared a special dividend to return surplus cash to shareholders.
Luxury-goods company Mulberry Group /zigman2/quotes/200060911/delayed UK:MUL 0.00% reported a swing to pretax profit for fiscal 2021 on lower costs and said that its year-to-date performance has been boosted by both the U.K. and Asia.
Mining stocks were in focus, such as shares of Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO -1.84% , which reported lower copper production for the second quarter of the year, and reaffirmed full-year targets. The company also sees moderate inflationary pressures ahead.