U.K. stocks climb as government borrowing eases and resource stocks surge


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
UKX,
+1.68%
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
GBPUSD,
+0.14%
was largely flat against the dollar.

Another move up for global stocks took other assets along, such as oil prices
CL00,
+2.17%

BRN00,
+2.06%,
gaining over 1% as the commodity rose for a second day in a bid to recoup Monday’s sharp losses. Shares of BP
BP,
+3.09%

BP,
+2.87%
and Royal Dutch Shell
RDS.A,
+2.80%

RDSA,
+2.57%
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
NXT,
+7.95%
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
MUL,

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
ANTO,
+3.78%,
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.  



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