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FTSE 100 edges higher despite German recession fears

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The FTSE index closed at 7,306.30 on Monday, up by 0.41%, or 29.93 points (Kirsty O’Connor/PA) (PA Wire)
The FTSE index closed at 7,306.30 on Monday, up by 0.41%, or 29.93 points (Kirsty O’Connor/PA) (PA Wire)

The London Stock Exchange’s FTSE 100 index rose slightly on Monday but bleak economic outlooks and rising rates continue to cause market jitters.

The FTSE index closed at 7,306.30 on Monday, up by 0.41%, or 29.93 points, kicking off a busy week of company results.

Markets remained resilient against economic worries with high energy prices and expected gas shortages meaning Germany is reportedly close to recession.

And traders will be preparing for Wednesday’s Federal Reserve decision where another hike in interest rates is anticipated.

Recent risk-on moves appear to be on thin ice as markets gear up for another bout of earnings and a crucial Fed rate decision

Joshua Mahony, IG

Despite rate hike fears, the S&P 500 rose 0.2% and Dow Jones was up by 0.3% by the time European markets closed.

Joshua Mahony, senior market analyst at online trading platform IG, said: “Recent risk-on moves appear to be on thin ice as markets gear up for another bout of earnings and a crucial Fed rate decision.

“As we have seen with the ECB and BoC (Bank of Canada), central banks are happy to push rates faster than most expect, with governors seeking to act swiftly before recessionary pressures kick in.

“In Europe, the latest German Ifo survey highlighted that the country is on the brink of an energy-driven recession.”

Worries over gas flow weighed on business confidence, which dragged the regular survey reading to a new two-year low.

The Dax index fell by 0.33% and the CAC 40 index was up 0.33%.

Meanwhile, the pound reached 1.1791 against the euro and 1.2037 against the dollar.

London’s banking sector had a strong start to a busy week for stock updates.

Barclays, which will update investors on Wednesday, gained 1.8%, while Natwest and Standard Chartered, which will both post figures on Friday, made even stronger rises.

In company news, online wine retailer Naked Wines dropped in value after its finance boss quit.

The group told shareholders on Monday morning that Shawn Tabak stepped down from his role as chief financial officer on Friday “by mutual agreement”.

It came weeks after the company’s shares plunged almost 40% after warning that sales could fall by up to 4% due to customers tightening their belts. It closed 3.8p lower at 161.2p on Monday.

Elsewhere, Vodafone reported rising first-quarter sales as price rises in the UK helped it offset a weaker German market.

The group said total revenues rose by 1.6% over the quarter, with service revenues up 2.5%.

Shares were flat at 129p following the session, as the update failed to stir significant reaction with traders.

Meanwhile, the price of oil benefited from weakness in the dollar but could see this swing again after Wednesday’s Fed decision.

Brent crude increased by 1.77% to 105.03 US dollars per barrel when the London markets closed.

The biggest risers of the FTSE 100 were Standard Chartered, up 18.2p at 591p, Glencore, up 10.6p at 432.8p, Anglo American, up 63.5p at 2,729p, Airtel Africa, up 3.9p at 168.6p, and Natwest Group, up 5.1p at 230.2p.

The biggest fallers of the day were Endeavour Mining, down 73p at 1,546p, Ocado, down 32p at 759.6p, Haleon, down 11.5p at 305p, Fresnillo, down 21.4p at 648.6p, and Dechra Pharmaceuticals, down 112p at 3,594p.

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