The FTSE 100 rose 1.6% this week, but nearly the entire move came on Thursday after soft U.S. payrolls data cooled Fed rate-hike bets. Strip out that session and London’s blue-chip index was roughly flat, with weak UK services data capping any broader rally.
The FTSE 100 owes its weekly gain to a single U.S. rates move rather than any improvement in the UK economy. The index closed Friday at 10,679.03, up 0.25% for the session and 1.6% on the week. Most of that came on Thursday, when the FTSE 100 jumped 1.7% as weaker U.S. payrolls knocked back near-term Fed rate-hike expectations. Take out Thursday and the rest of the week netted a small loss.
Miners and financials pace Friday’s move
Financials, gold miners and chemicals led Friday higher. Standard Chartered added 1.5% and precious-metal miners gained 1.4%, helped by gold trading above $4,160 an ounce and set for a 1.8% weekly rise. Johnson Matthey jumped 4.9% after its Catalyst Technologies sale to Honeywell won sign-off in China.
The FTSE 250 added 0.52% on Friday to close at 23,538.80. Mid-caps ticked higher even as the domestic backdrop softened.
UK services data undercuts the rally
The S&P Global UK services PMI fell to 48.8 in June from 49.3 in May, staying below the 50 line for a second month as new business dropped at the sharpest rate since November 2022. Tim Moore at S&P Global Market Intelligence described a clear loss of momentum, pointing to cost pressures and lacklustre demand.
Price pressures also kept the rate overhang in place. In the three months to June, firms told the Bank of England’s Decision Maker Panel they expected prices to rise 4.1% over the next year, up 0.1 percentage point from May, while expected wage growth ran at 3.5%. Rob Wood at Pantheon Macroeconomics said the results would keep the MPC looking at an extended rate hold.
Mann warns against reading the rally as growth
The Bank of England’s Catherine Mann said investors should not treat this week’s rally as a clear signal on domestic growth. Mann noted that markets have priced out a BoE rate hike for this year and said financial conditions were much tighter in June than now. Separately, a broader European rotation out of pricey U.S. tech left the STOXX 600 on track for a 2.6% weekly rise.
Sources: Reuters, Reuters, Reuters, Bank of England
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