April 25, 2024

Commodity Stocks Push The FTSE 100 Higher

On Thursday, there was a rise in the UK’s FTSE 100 index thanks to a boost in commodity shares, even though its gains were capped because of several stocks trading ex-dividend.

In addition, there were also concerns that a rapid tightening of the monetary policy by the Bank of England could push the economy into recession.

Index rises

There was a 0.4% rise in the benchmark FTSE 100 index by the end of the day, as a 2.6% rise was recorded in Antofagasta.

The Chilean miner climbed to the top of the index because of a rise in copper prices over hopes for robust demand in China.

There was also a 1.6% and 2.6% rise in oil majors Shell and BP, respectively, as crude prices rose because of strong US crude stocks data.

There was also a 0.6% rise in the domestically-focused FTSE 250 index, thanks to a 5.8% boost in the shares of Plus500 Plc.

This was only a day after a stronger half-year profit was posted by the online trading platform. The previous session had seen the index log its worst performance in a single day since June 30th.

This was after data had shown that consumer price inflation in Britain rose higher than expected to hit 10.1% in July, increasing bets of another interest rate hike in the next month by the Bank of England (BoE).

Markets rattled

Market analysts said that the Bank of England has been pushed into a corner, as it has no other choice but to become more hawkish due to a tight labor market and high inflation, despite a slowdown in the economy.

They added that considering the magnitude of the inflation, an economic recession has now become inevitable in the UK, and this would result in a toxic combination of monetary policy tightening and a fall in real incomes.

Markets have also been rattled this year because of increasing costs of living, as the domestically-focused FTSE 250 index has come down 14.2% this year, while the FTSE 100 has risen by 2.1%.

This is because the latter is more focused on defensive companies and global firms.

Meanwhile, the front-runner to become the next Prime Minister of Britain, Liz Truss has said that she wants to assess the roles of the country’s three financial regulators.

This would be part of a review, according to a source part of her leadership campaign.

Other stocks

As far as other stocks are concerned, there was a 5% rise in AO World, after the full-year underlying earnings of the online electricals retailer turned out to be better than analysts’ estimates.

The blue-chip FTSE 100 was weighed down some because of a number of shares trading ex-dividend. These included lender HSBC, miner Anglo American, and insurer Legal & General.

These recorded declines of between 0.8% and 4.1%. Nonetheless, the FTSE 100 index has fared better than most of its global peers in the year because of its focus on commodity stocks.

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