UK Stock Surge: The UK’s major stock indices staged an impressive rally on Friday, closing over 1% higher and marking substantial weekly gains. Investors, buoyed by a wave of economic data, are increasingly optimistic that interest rates may have reached their peak. The FTSE 100 (.FTSE) surged by 1.3%, while the FTSE 250 index (.FTMC) saw a solid 1.2% gain.
Despite a Thursday selloff, the week’s performance appears robust, fueled by indications of cooling inflation and signs of a softening economic landscape. This has fueled speculation of potential interest rate cuts by the Bank of England, propelling the benchmark index nearly 2% higher for its most impressive weekly performance in nine weeks. Simultaneously, the FTSE mid-cap index closed a remarkable 4% higher during the same period.
Official data revealed an unexpected drop in British retail sales volumes for October, reflecting cautious consumer behavior amid economic uncertainties. Emma Mogford, fund manager at Premier Miton Monthly Income Fund, noted a shift in consumer sentiment, signaling traders to factor in the prospect of interest rate cuts.
Futures markets reflect traders’ expectations, with a projected 80 basis points decline in interest rates by the end of 2024 from the current 5.25%, compared to just over 50 bps a week ago.
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In corporate developments, Tesco (TSCO.L) gained 0.3% amidst reports of Barclays (BARC.L) exploring an acquisition of the retailer’s banking operations, contributing to a 2.7% uptick in the lender’s shares. London Stock Exchange Group (LSEG.L) added 1.6% after raising mid-term growth guidance and announcing a £1 billion ($1.24 billion) shareholder return in 2024.
AstraZeneca (AZN.L) experienced a 0.9% rise following U.S. health regulator approval for its Truqap in combination with an older drug, expanding treatment options for the most common type of breast cancer.
FirstGroup (FGP.L) climbed 1.4%, reaching a over a 10-year high, as the transport operator disclosed plans to form a joint venture with Japan’s Hitachi (6501.T) for leasing up to 1,000 electric bus batteries, involving an investment of about £100 million ($123.9 million). The market dynamics showcase a mix of economic indicators and corporate movements influencing the UK stock landscape.
Our Reader’s Queries
Why is UK stock market rallying?
The UK stock market experienced a boost due to lower-than-anticipated inflation figures. Meanwhile, Chinese stocks hit a new three-year low and FedEx issued another warning. On the other hand, Petrofac saw a surge in its stocks following positive contract news.
Will stocks recover in 2024?
According to analysts, the S&P 500 is expected to reach a price target of 5,090 within the next 12 months, indicating a potential 6% increase from its current levels. However, Brad McMillan, the chief investment officer for Commonwealth Financial Network, suggests that the index’s upward momentum may be restricted in 2024 following its impressive performance in 2023.
Is 2024 going to be a bull market?
According to recent economic data, it seems that our theory about 2024 being the year of rate cuts is being validated. This is great news for the stock market as it should lead to a decline in rates worldwide and a lower possibility of a recession. As a result, we are feeling very optimistic about the future of the market and are as bullish as we’ve ever been.
Will market recover in 2023?
Despite the constant talk of an impending recession, the U.S. stock market is set to finish 2023 on a positive note. As of December 18th, the S&P 500 index has risen by an impressive 23.5%, which is quite remarkable considering the pessimistic outlook investors had at the start of the year.