A strong session for IAG, Vodafone and the Scottish Mortgage Investment Trust helped the FTSE 100 higher on Friday as investors globally paused for breath after a choppy week for equities.
Positive sentiment has helped lift global stocks in recent weeks, and it was a welcome surprise to see the FTSE 100 take part this week. Overseas indices, including the German DAX, Japanese Nikkei, and US S&P 500, have all broken to record highs in 2024 so far.
The FTSE 100’s weighting towards natural resources and the uncertainty surrounding the Chinese economy has prevented it from joining the party, so this week’s gains will be encouraging for UK equity traders.
The FTSE 100 shrugged off overnight weakness in the US and Asia to carve out minor gains on Friday. The index was 0.2% higher at the time of writing.
Interest rates were again at the forefront of investors’ decision-making processes after a raft of economic data this week raised questions around the time of the first rate cuts by major central banks.
“With the prospect of the Fed potentially waiting until later in the summer to cut rates, investors are getting impatient. The Hang Seng in Hong Kong fell 1.4% but Europe managed to avoid a big sell-off,” said Russ Mould, investment director at AJ Bell.
“Stocks in the energy and basic materials sectors were in demand, albeit the FTSE 100 faced opposing forces from weakness in consumer and industrial stocks.”
IAG
IAG shares took off on Friday as more analysts issued positive broker notes on the company. IAG shares were up 6% on Friday and are sharply higher than the lows recorded at the beginning of March.
“International Consolidated Airlines flew to the upper end of the FTSE 100 leader board after investors digested yet another positive bit of news for the company,” Russ Mould said.
“Analysts are turning positive on the stock and following last week’s upgrade by JPMorgan Cazenove, BNP Paribas Exane followed suit by switching from a negative to a positive view. This follows news earlier this week that Moody’s has put the company’s credit rating on review for an upgrade. A higher credit rating gives investors more comfort over the risks associated with owning the shares.”
Scottish Mortgage was also among the top risers after the Investment Trust announced it would buy back $1 billion in shares. The technology-focused trust is traded at over a 10% discount, and the move is an effort to reduce this discount. Scottish Mortgage was 3.9% higher.