The stocks driving FTSE 100 index to two-week high

Widely owned BP (LSE:BP.), Lloyds Banking Group (LSE:LLOY) and Glencore (LSE:GLEN) were among today’s big risers as the FTSE 100 index got a welcome break from recent China and rates-led turbulence.

The top flight’s advance came as UK traders got their first opportunity to react to events since Friday’s closing bell, including Beijing’s latest round of economic support measures.

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There was also relief that the Jackson Hole symposium is out the way after jitters over what Federal Reserve chair Jerome Powell might say about the outlook for US rates.

His comments on Friday afternoon reinforced expectations that a further 0.25% hike is likely in November. However, on the dovish side he acknowledged that inflation had moved lower and that there was uncertainty about monetary policy lags.

Wall Street investors took the comments in their stride as all three of the major US benchmarks closed Monday’s session higher for a second session in a row.

The momentum continued during today’s Asia trading hours after China’s move on Sunday to reduce stamp duty on stock trades for the first time in 15 years. The country’s central bank also eased residential property rules, adding to a growing list of steps by policymakers.

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UBS Global Wealth Management expects further support before the year-end in a further effort to rebuild investor and consumer confidence. The bank said today: “If policy measures continue to be unveiled in the coming weeks, the market narrative may shift from 'too little, too late' to a more confident stance as policymakers regain credibility.”

Hong Kong’s Hang Seng index, which last week entered bear market territory after a fall of more than 20% since January, added 2% to reach a two-week high.

The strong handover from Asia and yesterday’s strong session in Europe boosted the FTSE 100 index to its highest since 15 August. However, at 7,444 it remains significantly lower this month having ended July at 7,699.

The improved global risk appetite was accompanied by local cheer after the British Retail Consortium reported shop prices up by 6.9% this month compared with 7.6% in July.

This offered some further encouragement that Bank of England interest rates might not hit the 6% peak that many economists had predicted earlier this month.

Support for housebuilders also followed a decision by the government to scrap EU water pollution rules in a move that could enable 100,000 new homes to be built between now and 2030.

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The "nutrient neutrality" laws came into force in 2017 when the UK was in the EU, requiring developers to prove they will not cause any nutrients to leak into water in wetlands or other protected areas.

Persimmon (LSE:PSN) shares rose 40p to 1,027p in a late bid to escape relegation when the FTSE 100 reshuffle is calculated using tonight’s closing prices. Taylor Wimpey (LSE:TW.) also improved 3.2p but at 112.5p the builder is still 7p cheaper than where it was earlier this month.

Other UK-focused stocks in positive territory included Lloyds following a rise of 0.9p to 42.7p and NatWest Group (LSE:NWG) with a gain of 6.6p to 232.4p, while BT Group (LSE:BT.A) improved 2% or 2.7p. At 115p, the telecoms giant is little changed over 2023 but down 28% since April.

Hopes of stronger China demand combined with the threat of supply disruption as a tropical storm heads for America’s Gulf Coast, meant BP and Shell (LSE:SHEL) shares were boosted by a rise in the price of Brent crude oil to above $85 a barrel.

BP lifted 11.3p to 486.9p and Shell by 27p to 2,405.5p, while Glencore led the miners with a gain of 11p to 437.7p.

The focus now turns to Friday’s non-farm payrolls jobs report, which will have a bearing on the next policy move by the US Federal Reserve.

Deutsche Bank sees a further slowdown to 150,000 jobs in August, which would be the slowest growth since December 2020 for an unemployment rate up a tenth to 3.6%.