On Friday, the UK FTSE 100 index saw a boost, thanks to defensive stocks that got a lift and ended a choppy week of trading. Throughout the week, investors had been anxious about the hawkish stance of most global central banks, the increasing risks of global recession and the weak output and economic data.
UK Indexes Climb
There was a 2.7% gain recorded in the blue-chip FTSE 100 index with consumer staple and healthcare stocks recording the biggest rises. These stocks are usually the ones that decouple because of economic cycles. A 2.3% gain was also recorded in the domestic FTSE 250 index. Both these indexes were finally able to snap a run of losses that had lasted for three weeks.
The latest data showed that there was a 0.5% decline in the retail sales volume in Britain last month, which indicated that customers had decided to cut back on their spending because of the rising inflation numbers. Likewise, there was also a sharp revision of the increase in sales recorded back in April. Other data showed that there was also a decline in consumer confidence in the United Kingdom this month, which hit a record low.
Market analysts said that it was not just the increase in bills that was a concern, but the possibility of even higher bills in the future. Then you combine it with the risks of recession and the finances just unravel.
More Uncertainty
The political situation in Britain has only been adding to the uncertainty in the market. On Friday, the Conservatives party of Prime Minister Boris Johnson lost two parliamentary seats in by-elections. This comes as a huge blow to the governing party, which has increased doubts about the future of the prime minister in Britain.
This political turmoil makes things worse when it comes to the economic situation because it is impossible to make forecasts. Meanwhile, Huw Pill, the Chief Economist for the Bank of England, said that the central bank would primarily rely on interest rates for getting a control on inflation. While the BoE has said that it could become forceful in terms of fighting inflation, expectations are that they will remain soft in terms of hike, as the economy is already slowing down.
Stock Performance
Amongst individual stocks, there was an 8.7% gain recorded in Carnival Corp after the cruise operator shared its core profit forecast for the current quarter was a positive one. The company is now returning to full operation, even with surging fuel prices and the highest inflation recorded in decades.
There was also a 12.3% rise in Ultra Electronics after Britain decided to step forward in its approval of the planned transaction between the defense firm and its competitor Cobham. Initially, it had made objections to the deal.
There was also a 2.1% surge in shares of GSK, after French company Sanofi, which worked with GSK on its COVID-19 vaccine for the Omicron variant, said that they had found it to be quite effective.
