Wednesday, May 24, 2023
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FTSE 100 gains ahead of Easter break

The FTSE 100 was set to finish the week on a high as the index rallied into the close ahead of the Easter break. Higher oil majors again provided a boost to the index in what was a broad rally with cyclical sectors leading the charge.

The FTSE 100 was 0.9% higher at the time of writing while the German Dax added 0.3%. US stocks were flat to slightly down after a softer session overnight.

The concerns about the health of US economy evident in US stocks were shaken off in Europe where the focus was on oil prices and the relative value of cyclical names after the recent sell off.

Many European equity exchanges will be closed tomorrow when March’s Non-Farm Payrolls will be released. The US has recorded strong job creation so far in 2023 – but there are worries this will start to slow and shows signs of a contractionary environment.

“The market will look to the March number and also any revisions to January and February to take the temperature of the US economy. Upward revisions usually indicate strength, downward revisions can be suggestive of a weakening or loss of economic momentum,” said Danni Hewson, head of financial analysis at AJ Bell.

A disappointing set of US manufacturing data yesterday led to a softer session for US stocks overnight. US manufacturing PMI data for the month of March declined demonstrating a slow down in US economic activity.

“Following a weak readout for US manufacturing earlier in the week the US Services PMI index fell from 51.2 in March from 55.1 in February and well below consensus forecasts of 54.5. There’s further signs too of a weakening US labour market  with private sector hiring rising by just 145,000 in March, down from 261,000 in February and below the estimate for 210,000,” said Derren Nathan, head of equity research, Hargreaves Lansdown.

Many economists are now predicting a US recession, the timing of which varies dramatically.

Notwithstanding concerns about the US economy, UK and European shares were upbeat and showed a rare disregard for happenings across the pond.

This may be down to lower volumes ahead of the holidays. Nonetheless, there were plenty of reasons for cheer across FTSE 100 stocks.

Shell shares gained after providing a positive insight into Q1 activities. Shell shares were 2% higher on strength in their LNG business and hopes of strong cash generation.

Admiral Group, BT and Unite Group were among the top risers as they continued recent rallies.

UK banks Lloyds, Barclays and Natwest built on their recoveries from the recent banking crisis. Barclays was trading above 150p while Lloyds looked set to attack 50p.

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