MARKET REPORT: FTSE 100 Maintains Gains as Inflation Cools Off
By John Abiona | Updated: 22:32 BST, 21 July 2023
The FTSE 100 experienced its most impressive weekly performance since March, thanks to better-than-expected UK inflation data. This data has instilled hope that interest rate hikes will not be as severe as initially anticipated. The blue-chip index saw a modest gain of 0.2%, or 17.68 points, reaching 7663.73. This week, the FTSE 100 increased by 2.84%, a feat unseen since the final week of March when it rose by 3.06%.
The positive trend was triggered by official figures released on Wednesday that revealed a sharper-than-expected decline in inflation from 8.7% in May to 7.9% in June. This development has sparked optimism that the Bank of England may opt for a smaller rate increase next month.
However, London’s second-tier index, the FTSE 250, concluded the week with a 0.6% decrease, or 111.28 points, reaching 19,200.45. Nonetheless, the mid-cap index experienced a 4.01% gain this week, marking its best performance since October of the previous year when it rose by 4.13%.
Richard Hunter, the head of markets at Interactive Investor, highlighted that traders were responding to potentially improving conditions in the UK. However, he also mentioned upcoming challenges next week with UK banks releasing their half-year results, which will provide further insight into the economic outlook.
In addition, there was a positive impact on oil prices as China pledged to stimulate car and electronics sales to revive sluggish demand in the world’s second-largest economy. Brent crude oil prices rose by 1.5% to exceed $80 a barrel. This increase benefitted oil companies such as BP, up 0.8%, and Shell, up 0.9%.
AMTE Power faced more difficulties towards the end of a challenging week. Sky News reported that the Scottish battery cell maker’s request for government funding had been rejected. Earlier this week, AMTE Power had warned of potential administration and the suspension of trading on AIM if it did not secure additional funds. Consequently, AMTE Power’s shares fell by 14.3%.
On a more positive note, Babcock saw a 4.4% increase in its share price following the defense group’s optimistic outlook and announcement of a dividend reinstatement.
Hargreaves Lansdown also concluded the week on a positive note after receiving an upgraded rating from broker Jefferies. The investment platform experienced a 1.9% rise in shares following news that new customers had invested £1.7bn in the second quarter of the year, a 6% increase compared to the previous quarter.
Glencore, the mining company, reported mixed results for the first half of the year, with only cobalt and gold production increasing, while copper, coal, and zinc production declined. Despite this, Glencore maintained its full-year forecasts.
First Group, the bus and train operator, proposed a new share buyback program of up to £115m to return cash to investors. The company’s shares increased by 3.1% as it confirmed that trading in the new financial year was in line with expectations despite ongoing industrial action.
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