MARKET REPORT: Global stocks rally at the end of a turbulent week
MARKET REPORT: Global stocks rally at the end of a turbulent week in which investors worried about the state of economies around the world
World stocks rallied yesterday at the end of a turbulent week in which investors worried about the state of economies around the world.
A cocktail of concerns, from the war in Ukraine and fresh Covid outbreaks in China to skyrocketing inflation and rising interest rates, has caused wild fluctuations in financial markets so far this year.
However, there was a much-needed respite yesterday, as the FTSE 100 rose 2.6 percent, or 184.81 points, to 7,418.15, while the FTSE 250 rose 2.3 percent, or 441, 01 points, to 19921.89.
To the upside: The rally came after strong selling in stock markets around the world amid fears of a recession
The gains were echoed in Europe with Cac, the main benchmark in France, up 2.5 percent while the Dax was 2.1 percent higher in Germany.
And in the US, where Elon Musk’s decision to suspend his £35bn takeover of Twitter sent shockwaves through Wall Street, the Dow rose 1.1%, the Nasdaq 4.1% and the S&P 500 2.6%.
The rally came after strong selling in stock markets around the world amid fears of a recession in Britain and Europe, and even in the US, where tech stocks in particular have come under pressure.
“After the recession fell there was a calmer feel to the market proceedings,” said AJ Bell chief investment officer Russ Mould. But with official figures next week showing UK inflation rising from 7 per cent in March to a 40-year high of around 9 per cent in April, he added: “It looks like we could be in for a ride a little wild”. albeit for some time.
Oil prices rose back above $110 a barrel as the market continued to be pushed and pulled by the prospect of a European Union ban on Russian crude supplies and concerns about faltering global demand.
The rise in oil prices sent BP shares up 3.6 percent, or 14.55 pence, to 414.7 pence, while Shell rose 2.8 percent, or 63 pence, to 2,303, 5 pence.
With tech stocks rallying on Wall Street, the Scottish Mortgage Investment Trust rose 7.3 percent, or 55 pence, to 805.8 pence.
One of the most popular funds in the UK, its main holdings include Tesla and Amazon.
However, it is still down about 40 percent this year, reflecting the drop in tech stocks.
Also in London’s blue chip index, Coca-Cola HBC shares rose after analysts at Jefferies upgraded their shares to ‘buy’ from ‘hold’ and raised the price target to 2,000 pence from 1,800 pence.
Shares of the bottling company rose 4.7 percent, or 79.5 pence, to 1,766.5 pence.
But shares of Vodafone fell 0.8 percent, or 0.9 pence, to 117.82 pence, where analysts said the telecoms giant is in a “sticky spot”. Jefferies lowered his rating from ‘hold’ to ‘buy’ and cut his price target to 125p from 150p.
Earlier this week, Vodafone said it was in talks to merge with rival Three in a move to expand its share of the UK mobile market.
The merger, if completed, would combine Britain’s third and fourth largest network operators.
Energy company Drax Group was dragged down 3 percent, or 23.5 pence, to 749.5 pence after Credit Suisse downgraded its ratings to ‘underperformer’ from ‘neutral’. Drax has benefited from the recent increase in gas prices.
But analysts at Credit Suisse said it could suffer as prices decline or a windfall profits tax is introduced in the sector.
Analyst Mark Freshney said: ‘Drax has performed well on the back of extremely high natural gas prices following the Russian invasion of Ukraine.
‘Our [downgrade] either the price of gasoline is predicted to recede in our forecast, or else Drax gives up some of the benefit through taxes on windfall profits.’