On Friday, the UK FTSE 100 index climbed higher, thanks to a boost from consumer staple and energy stocks in a week that saw Britain undergo a lot of political turmoil. Plus, major central banks continued to make hawkish comments and the energy prices in Europe also continued to rise.
There was a 0.1% gain in the blue-chip FTSE 100 index after it had shed almost 0.8%. As the FTSE 250 index is more domestically focused, there was a gain of 2.0%. The two indexes still managed to end the tough week on a higher note.
There was a gain in oil majors like Shell and BP, as they advanced by 0.5% and 0.3%, respectively. This gave the FTSE 100, which is commodity-heavy, a strong boost. Concerns about tightness in supply had seen a rise in prices of crude in volatile trading, leading to the increase.
However, it is also a fact that energy stocks recorded the worst performance in the week, as there was a decline in crude prices over concerns about dwindling demand that could happen if there is a recession.
Despite the resignation of UK Prime Minister Boris Johnson, concerns about an unfavorable economic outlook had driven a 0.9% decline in the British pound. However, the currency managed to reverse the course and climbed higher.
Earlier this week, the sterling had declined to hit lows of two years against the US dollar because of the political turmoil in the country, combined with the concerns about slowing economic growth. Market analysts said that the economy is reaching stagnation and there could be a policy vacuum at this time, which does not look good.
Due to the political chaos, it is unlikely that the Budget would be presented before the fourth quarter, which means the Bank of England will now be in focus. It also reduces the possibility of a further increase in the interest rates, as the BoE is likely to go with a wait-and-see approach.
With the UK markets grappling with risk aversion, they had started the day on shaky ground. This was also because of the shooting of Shinzo Abe, the former Prime Minister of Japan. It was not until the US jobs data was disclosed that concerns about the recession were eased. This is because the jobs data turned out to be better than expected, thereby making it more likely for the Federal Reserve to increase interest rates.
There was a 2.2% rise in Vistry Group Plc, as the housebuilder shared forecasts of its gross margins recording a significant increase in the 2022 fiscal year. This was primarily because it had seen a strong demand so far.
Meanwhile, things are not looking good for Europe, as the continent seems more likely to end up in recession than the United States for now. The European Central Bank (ECB) is also scheduled to meet later this month and would be hiking its interest rate, which would be the first in a decade.