Full sign-off for debt ceiling deal helps boost sentiment, US jobs numbers in focus, Dechra agrees to takeover

“As expected, the Senate swiftly approved the new debt ceiling deal in the US prompting relief in the markets with the FTSE 100 making decent progress on Friday morning,” says AJ Bell Investment Director Russ Mould.

“A bigger bounce might have been forthcoming had investors not already been very much factoring in an agreement, with only a modest sell-off around the crisis.

“With disaster averted for now, attention will turn to other matters which have been overshadowed by the drama in Washington.

“This isn’t necessarily a good thing for markets as there is plenty to worry about, including a sluggish recovery in China and continuing risks around recession and rates in the West.

“US jobs numbers this afternoon may provide some pointers to the next move by the Federal Reserve, whose decision making no longer needs to consider the potential financial stability risks associated with default on US debt.

“If the non-farm payrolls data indicates continued tightness in the labour market, the Fed may feel it has to continue with rate rises when it meets on 14 June.

“The gradual thinning of the London market’s ranks continues with news animal-based medicine specialist Dechra Pharmaceuticals has agreed to a takeover by Swedish private equity firm EQT.

“While some shareholders may welcome the modest premium on offer, the long-term consequences of a hollowing out of the mid-sized universe from which future giants are likely to be drawn does not do much for the health of the wider UK market.”

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