Having first breached the 8,000 barrier in February last year, the FTSE 100 reached record levels once again last week. With index constituents deriving the bulk of their revenues and earnings overseas, the recent retreat in the pound which is trading close to five-month lows against the dollar, provided a springboard. The retreat in the pound is more reflective of strength in the dollar which has rallied in recent weeks due to expectations of when the first Federal Reserve rate cut may occur being pushed back to later in the year. That factor helped the FTSE 100 to gain by +3.1% last week with reduced concerns regarding a major escalation of the ongoing conflict in the Middle East also providing support.

Last week was a strong one in general for global equity markets with all major indices concluding Friday’s trading in positive territory. In the US, the S&P 500 rose by +2.7% (in dollar terms) to break a run of three consecutive weekly losses. The technology centric NASDAQ fared even better, the index jumping by +4.2% with strength from the likes of Apple and Amazon notable contributors. Back across the Atlantic, the MSCI Europe ex UK climbed +1.4% (local currency) with sentiment improving on the back of positive solid corporate earnings. Currency remained a major influence in Japan where a further sell-off in the Japanese yen helped the Nikkei 225 to advance +2.3% (local currency). Meanwhile in China, improved sentiment regarding the state of the economy helped to lift the Shanghai Composite by +0.8%.

In commodity markets, oil prices ticked higher on concerns relating to supply. Brent crude added +2.6% to $89.58 a barrel with a decline in US inventories also contributing. Gold retreated by -2.5% to $2,333 an ounce, investors banking profits after a particularly strong run for the precious metal. As for copper, it maintained its recent strong momentum to rise by +0.6% to $9,853 a tonne. The metal is trading close to its highest level for two years thanks in part to the improvement in optimism around the Chinese economy.

Week Ahead

Source: Refinitiv Workspace, 29/04/24

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