The FTSE 100 index soared on Friday, breaking a three-day losing streak. Experts attribute this upward trend to sturdy performances by mining and energy companies. Additionally, the pound’s value decreased due to a decrease in retail sales in December, helping companies export goods to other countries by making their products more competitively priced.
This combination of factors led to a positive outcome for the FTSE 100 index, signaling a promising start to the new trading week.
The positive trend for the FTSE 100 and FTSE 250 indexes continued on Friday, with both indexes rising by 0.4%. The FTSE 250 mid-cap index (.FTNMX551020) also saw a significant increase of 0.8%, while the FTSE Small Cap index (.FTNMX601010) rose by an impressive 1.1%.
This upward momentum is due to good performances by mining and energy companies, including BHP Group and Royal Dutch Shell, alongside increases in crude and copper prices. Investors attribute the rise in prices to expectations of increased demand from China as the pressures of COVID-19 ease.
These factors contributed to a bullish market for the FTSE 100 and FTSE 250 indexes, signaling a promising outlook for the coming weeks. However, despite the positive performance of the FTSE 100 and FTSE 250 indexes, data from the UK revealed that retail sales have been narrowing as high food prices have impacted consumers’ ability to buy.
These developments are crucial in the pound losing 0.3% in the week. According to analyst Daniela Hathorn, there were fewer enthusiastic reactions when the data arrived. However, it did not come as a surprise as many experts expect further drops.
This data highlights a potential economic challenge for the UK, as consumer spending is a crucial driver of economic growth. It will be essential for companies to closely monitor this trend and adapt their strategies accordingly to navigate this challenging economic environment.
According to analyst Daniela Hathorn, the recent retail sales data, inflation, and growth data from Q4 suggest that investors should expect a rate hike of over 0.5% in the next month. This news has driving impacts on the market, with the FTSE 250 mid-cap index experiencing its biggest hit since 2008.
Despite this, the week has been positive for the index, as it crossed its first golden cross in 24 months on Friday. This statement suggests that despite the challenges presented by the potential rate hike, there are still positive indicators for the market.
A golden cross is a sign in the stock market that things are good. It happens when a line that shows the average of the stock prices over a short period (like 50 days) goes above a line that shows the average over some time (like 200 days). This increase suggests the stock’s value might keep rising.