Britain’s FTSE 100 index hit a better-than-three-year high on Friday, boosted by miners and power stocks. At the same time, slower-than-expected U.S. jobs change fuelled hopes that the world’s largest economy may be less aggressive in raising interest rates.
The export-oriented FTSE 100 (.FTSE) locked up 0.9%, while the domestically concentrated FTSE 250 (.FTMC) ended 0.2% higher by 1645 GMT.
“The numbers’ resilience helps reinforce optimism that the U.S. economizing will avoid a hard landing type of recession over the next few months. This reflects in the FTSE 100, which is again performing well,” said Michael Hewson, chief market analyst at CMC Markets.
Rising reasonable rates globally weighed on risk sentiment last year as investors worried about a consequent recession. However, the FTSE 100 outperformed significant global peers, helped by gains in commodity-linked stocks.
Back home building activity fell last month at its sharpest rate since May 2020, a survey conducted, as new orders dried up in the face of rising curiosity rates and broader cost pressures.
Also, data from mortgage lender Halifax showed British house prices slid again in December, but the building sector (.FTNMX501010) was up on broader need sentiment.
Among stocks, Clarkson (CKN.L) jumped 5.1% after the shipping group said it expects 2022 profits to be ahead of market expectations.
Oil kingpin Shell Plc (SHEL.L) rose 1.7% after it said revenues from its liquefied natural gas trading operations are likely to have been significantly higher in the fourth quarter of last year.
Tesla took the top spot in December, with investors barking up the stock as it suffered another nearly 40% fall in price during the month. The company avenged missing earnings projections as it grapples with store chain issues and slowing demand.
Russ Mould, acquisition director at A.J. Bell, remarks: “For much of 2022, Tesla’s share worth was better befitting of a clapped-out old banger than a polished, sleek device, and it doesn’t glance like there’s going to be an immediate change of pace for the company in 2023 given quarterly deliveries have dropped short of management expectations.”
Investors continued to support ‘big dividend’ payers, with oil and gas giant B.P. and miner Glencore making the top 10 again. Although items firms wanted bumper returns in 2022, there are indications that the sector may see a more peaceful performance heading into 2023.
Investors also assumed a potential rebound in the valuation of beleaguered U.S. tech products, taking the chance to buy Apple and Amazon shares at their lower prices in over two years. Indeed, both parties have now lost over $1 trillion from their peak valuations.
Another possible recovery play is Argo Blockchain, whose share price has slammed by nearly 90% over the past year. The embattled crypto miner is launching a significant restructuring to stave off bankruptcy.
Small-cap Kala Pharmaceuticals also captured the eye of investors, as its share price rocketed from $5 to $38 during December on notice of FDA clearance for its new drug for a rare form of eye disease. However, investors prepared for a rocky ride, with its share price shooting $90 at one point earlier last year.
The most-sold claims in December remained the same, with Lloyds and Rolls-Royce featuring five of the last six months.
Entities colossi Rio Tinto, Glencore, Shell, and B.P. continued to dominate the list. Except for Rio Tinto, these organizations have awarded shareholders a 30% plus share price increase over the last year, but investors may be selecting to cash out at this point.
A.J. Bell’s Russ Mould comments: “If central banks follow in reining in inflation, reasserting power and bringing the world back to the low-growth, low-inflation, low-interest ‘Goldilocks’ environment that lasted throughout the 2010s, then commodity prices could again stumble. They may also do so if we get a deep recession.”
Tesla re-captured its distinction as the most-sold share in December, which it last reached in July. As noted, Tesla is not immune to the deceleration in shopper spending and faces growing competition from other electric vehicle plants, such as BYD in China.
Sophie Lund-Yates, the equity analyst at Hargreaves Lansdown, comments: “Tesla has never tested in times of recession. With the unknown depth of the incoming economic crisis, we have reservations about how long Tesla can keep raising its prices without declining volumes and margins.”