FTSE shakes off inflation fears with a late surge
THE wobbles facing the stock market earlier in the week looked firmly in the past as the London Stock Exchange closed on a high.
The FTSE 100 leading index of shares ended the day up 80.28 points, or 1.15%, at 7043.61 – closing back above the psychologically important 7,000 mark for the first time since Monday.
Fears had been raised previously that the global economy was overheating and higher inflation was on its way – starting with a tech sell-off in the US earlier in the week. But poor retail sales from the US – where jitters tend to start – calmed expectations that inflation was coming and shares ticked up across the board.
Michael Hewson, chief market analyst at CMC Markets UK, explained that the UK leading index could have had a better day if not for poor performances from mining stocks.
He said: “The underperformance in the FTSE 100 is primarily being driven by mining stocks which are getting clobbered on the back of a sharp slide in iron ore and copper prices, after Chinese authorities expressed concern over their recent steep rise, amidst a surge in production at Chinese steel mills.
The analyst added: “While this is not good news for miners, it’s much better news for the rest of us given that a lot of the concerns about inflation have been driven by recent surges in commodity prices.”
Miners Rio Tinto, Antofagasta, Evraz and BHP were all in the worstperforming shares for Friday.
The German Dax 30 closed up 1.43% and the French Cac 40 was up 1.54%.
A pound was worth 1.41 dollars and worth 1.16 euros both flat on the previous day’s trading.
In company news, hobby retailer The Works revealed a 121% boom in online sales in the 12 months to the start of May. But the rises were not enough to offset falls from stores being closed for 16 weeks during the year, sending total revenues down 19% to £206.2 million.
When stores did open likefor-like sales were up 6%, although bosses did not revise profit forecasts following a profit warning issued in January. Shares closed down 2.6p, or 3.6%, at 70.1p.
Software giant Sage revealed that pre-tax profits dropped 31% to £190 million in the six months to the end of March. Revenue also dropped, by 4% to
£937 million.
However, shareholders were pleased to see that organic recurring revenue, a separate measure which essentially catches subscription, rose 4.4% to £811m over the period and welcomed news that the company expects to reach the upper end of forecasts this year. Shares closed up 23.8p at 647.4p.
And shareholders in property builder Crest Nicholson also cheered the news that the firm has sold its half of Surrey-based Longcross film studio to Aviva, which already owned the other half. The £45m deal is expected to be completed in late summer this year and sent shares up 6.6p, or 1.6%, to 427.8p.