The FTSE 100 index rose slightly on Wednesday as gains from the retailer Next and several mining companies countered a decline in Asia-focused financial stocks. The index closed up 8.92 points at 10,888.30, while broader UK markets also saw gains, with the FTSE 250 rising 0.7% and the AIM All-Share increasing 1.0%. The market movement coincided with updated economic data showing that the UK services sector grew faster in July than previously estimated.
The S&P Global UK services PMI, a measure of business activity, rose to 52.1 in July from 48.8 in June, surpassing the initial flash estimate of 51.8. Analysts noted that new business increased for the first time since February, driven by demand for technology services and signs of rising consumer spending. However, manufacturing data released earlier in the week showed a slight slowdown, with that sector's PMI easing to 51.9 from 52.5 in June.
Retailer Next saw its shares rise 5.7% after reporting that full-price sales grew 9.2% in the 13 weeks to August 1, significantly higher than its previous 4% forecast. Meanwhile, mining firms Endeavour Mining and Fresnillo gained 5.7% and 4.5% respectively as precious metal prices rose. In contrast, financial firms Prudential and HSBC saw shares fall by 6.4% and 4.7% following reports that Chinese tax authorities have begun taxing returns on offshore insurance policies.
The scale of these changes is reflected in the multi-billion dollar movements across the London Stock Exchange. Next’s 9.2% sales growth in the second quarter represents a "material" outperformance of millions of pounds compared to company expectations. Conversely, the tax policy change in China affects the sentiment surrounding Asia-focused financial institutions that manage billions in assets. For a household with a £50,000 diversified UK stock portfolio, a 0.1% daily rise in the FTSE 100 represents a £50 increase in value, though the specific impact varies widely based on whether they hold the high-performing mining stocks or the declining financial shares.
The rise in the services PMI above the 50.0 threshold indicates the UK services sector is expanding rather than contracting. This typically correlates with more stable employment in service-based roles and can influence future interest rate decisions by the Bank of England. The immediate knock-on effect of the current economic climate was visible in currency markets, where the pound rose to 1.3466 US dollars. Looking ahead, investors are awaiting UK construction PMI data and US initial jobless claims due on Thursday, alongside half-year financial results from Admiral, Persimmon, and Diageo.