By Chris Dorrell
London’s FTSE 100 markets were flat at the beginning of the week after the US government narrowly avoided a painful shutdown over the weekend.
The capital’s premier bluechip index dropped just under 0.1 per cent to trade at 7,600.40 while the mid-cap FTSE 250 rose 0.2 per cent to trade at 18,320.24.
The US government managed to avoid a shutdown after President Biden signed into a law a stopgap funding bill minutes before the deadline.
Right wing Republicans in the House were seeking to impose wide-ranging cuts to the Federal budget, including cut military support to Ukraine. The bill secures government funding until 17 November, meaning US lawmakers have about six weeks to find a more long-lasting solution.
Susannah Streeter, head of money and markets, Hargreaves Lansdown: “With a US government shutdown averted for now, it has brought a measure of relief, helping the FTSE 100 step into October with a nudge of positivity in early trade.”
In the UK new data showed that the manufacturing sector remained mired in downturn. According to the Chartered Institute of Procurement & Supply (CIPS) the UK manufacturing purchasing managers index (PMI) recorded 44.3 in September.
Although September’s reading was stronger than the 43.0 recorded in August, it was still among the weakest readings seen in the last 14 years.
“Demand was impacted negatively by ongoing market uncertainty, the cost-of-living crisis and weak conditions in overseas markets,” the survey said.
On the FTSE 100, Severn Trent and United Utilities rose as the water industry prepares for a wave of investment to improve the state of the UK’s leaking water infrastructure. It is expected both firms will issue new equity to fund the investment.
Severn Trent climbed 2.2 per cent while United Utilities rose 2.5 per cent.
“In the wake of the Thames Water debacle and with increased focus on the management of the UK’s ageing wastewater infrastructure, the water utilities are in the spotlight in a way they haven’t been for a long time and which could be making them feel quite uncomfortable,” AJ Bell’s investment director Russ Mould said.
“It’s in this context that the likes of Severn Trent last week and Pennon and United Utilities today are announcing big investment programmes as part of their business plans submitted to regulator Ofwat. They are looking to reduce the levels of pollution which have made their names mud with environmental campaigners and the public.
BAE Systems climbed 1.5 per cent after it was awarded a £3.95bn contract to build a new generation of submarines as part of the Aukus defence pact.
