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24-12-2023
LONDON: British equities logged solid weekly gains heading into the Christmas holidays on Friday amid rising hopes that major central banks, including the Bank of England, could consider interest rate cuts next year.
The blue-chip FTSE 100 (.FTSE) edged 0.04% higher, extending gains to a fourth week, while FTSE 250 midcap index (.FTMC) rose for a third straight week, up 0.3%.
The rally in global markets driven by the Federal Reserve’s dovish pivot and a surprise drop in domestic inflation boosted UK equities.
Britain’s economy might now be in a recession, according to data, which showed output shrank in the July-to-September quarter.
“The outlook for 2024 looks shaky with a sluggish consumer, ongoing price increases and more expensive borrowing costs,” said Victoria Scholar, head of investment at interactive investor.
A separate reading showed that British retail sales volumes rose by 1.3% in November, compared with the month before.
The November U.S. Personal Consumption Expenditure (PCE) index, the Fed’s preferred inflation gauge due later in the day, would be on investors’ radar.
Retailers (.FTNMX404010) were amongst the top decliners, down 0.7%, while construction and materials (.FTNMX501010) were the top gainers, adding 1.0%.
Heavyweight energy stocks (.FTNMX601010) added 0.4%, tracking rising crude oil prices as tensions persisted in the Middle East following Houthi attacks in the Red Sea, capping losses.
Aerospace and defence (.FTNMX502010) was the best performing FTSE 350 sector this week, while personal goods (.FTNMX402040) was the worst hit.
The UK markets will be offline on December 25-26 on account of Christmas and Boxing Day holidays.
Among individual stocks, Sportswear Company JD Sports (JD.L) lost 5.1% after U.S. firm Nike (NKE.N), the world’s largest sportswear maker, trimmed its annual sales forecast, blaming cautious consumer spending.
British retail sales volumes rose by 1.3% in November compared with the month before, figures from the Office for National Statistics showed on Friday.
Economists polled by Reuters had forecast that sales volumes would rise by a median 0.4% on the month although the estimates ranged widely.
Compared with November last year, retail sales were 0.1% higher. The Reuters poll had pointed to a fall of 1.3%.
Excluding sales of automotive fuel, sales volumes rose 1.3%on the month and were 0.3% higher compared with November 2022.
Britain’s shoppers have been hit by a rise in borrowing costs which stand at a 15-year high and by rapid inflation which dropped below 4% in the latest data but outpaced growth in wages for much of the past two years.
The ONS had said last month that wet weather in October contributed to a 0.3% fall in sales volumes that month, but on Friday it revised estimates to show they were flat. (Int’l News Desk)
