Investing
FTSE 100 gains but set for weekly losses on slowdown worries
Global Banking & Finance Review®
Company
By Sruthi Shankar
(Reuters) -Oil and defensive stocks on Friday lifted London’s FTSE 100 index, which was still set for a weekly loss on worries about aggressive interest rate hikes and a sharp slowdown in China’s economy.
The blue-chip FTSE 100 added 0.6%, supported by energy giant Shell and British American Tobacco. The domestically focussed FTSE 250 index gained 1%.
However, sluggish economic growth in China due to widespread COVID-19 lockdowns continued to weigh on sentiment, with Asian stocks hitting a two-year low.
The lockdowns took a toll on London’s luxury brand Burberry, whose first-quarter comparable store sales rose just by 1%. The weakness in its biggest market pushed its shares 5.8% lower.
“Mainland China is acting as a serious drag for the group, which is overshadowing successes elsewhere,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.
Both the UK equity benchmarks were poised for weekly losses as investors feared of a big policy move by the U.S. Federal Reserve later this month to curb soaring prices.
Bank of England (BoE) Deputy Governor Dave Ramsden said on Thursday interest rates very likely will have to go up further to stop a repeat of the persistent inflation.
Investors were pricing a roughly 83% chance of the BoE announcing a rare half-percentage point hike on Aug. 4.
UK-listed shares of Rio Tinto slipped 2.7% after the global miner warned that labour shortages and soaring inflation would impact its earnings in the second half.
Low-cost carrier EasyJet dropped 1.2% after J.P. Morgan downgraded the stock to “underweight”.
Tonic maker Fevertree fell 24.4% after it lowered its annual profit forecast, citing worsening cost pressures and logistical issues.
Aston Martin’s shares surged 15.3% to the top of the midcap index after the luxury carmaker brought Saudi Arabia’s sovereign wealth fund as its second-largest shareholder and said it was looking to raise 653 million pounds ($771.58 million).
(Reporting by Sruthi Shankar in Bengaluru; Editing by Sherry Jacob-Phillips and Arun Koyyur)
The FTSE 100 is a stock market index that represents the 100 largest companies listed on the London Stock Exchange, measured by market capitalization.
Interest rates are the cost of borrowing money or the return on savings, expressed as a percentage of the amount borrowed or saved, typically set by central banks.
Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power, often measured by the Consumer Price Index (CPI).
Economic growth refers to an increase in the production of goods and services in an economy over a period, usually measured by the rise in Gross Domestic Product (GDP).
A stock market is a public market for buying and selling shares of publicly traded companies, where investors can trade ownership stakes in businesses.
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