Equity bulls were in the driving seat on Friday as the FTSE 100 continued to break to new highs. Concerns about interest rates and geopolitical risks are fading into the background as London’s leading index chalks up another day of gains.
The FTSE 100 was 0.45% higher at the time of writing, trading at 8,115. The index was up over 2.7% on the week, comfortably above 8,100.
“What a fantastic week for the FTSE 100. We’ve had new record highs, yet more takeover action, and everyone is talking about UK stocks in a positive way which hasn’t been seen for ages. There was no stopping the blue-chip index on Friday as NatWest’s results went down well and we saw gains across most of the market. The breadth of sectors moving higher suggests investor sentiment continues to improve,” said Russ Mould, investment director at AJ Bell.
The interest rate and geopolitical risks we mentioned haven’t gone away, but a week packed full of upbeat corporate earnings and M&A activity has fired sentiment into the stratosphere.
The FTSE 100’s weighting towards banks and miners has helped the index outperform other global indices this week as the US ponders interest rate cuts and mixed tech earnings. That said, Microsoft and Alphabet earnings overnight were playing apart on Friday with US futures ticking higher.
“The FTSE 100 has reached yet another untouched summit, as investors remain in a positive mood. There has been a flurry of strong results from big hitters like Barclays and AstraZeneca on Thursday, which has helped carry the FTSE to these new highs. The market’s also reacting to the news that consumer confidence has improved slightly, according to data from GfK,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
NatWest
NatWest contributed to the positive earnings picture on Friday, as the stock gained more than 5% after announcing Q1 profits and income that beat expectations.
NatWest was the last of the UK-focused FTSE 100 banks to report this week and the market reaction to the stock was certainly the highlight of Lloyds, NatWest and Barclays.
“NatWest is best of the bunch. Lloyds and Barclays led the way this week and NatWest certainly hasn’t disappointed with first-quarter results very nearly a clean sweep vs expectations. Impairments came in lower than expected, net interest margin ticked higher from the previous quarter and both customer loans and deposit levels grew,” said Matt Britzman, equity analyst, Hargreaves Lansdown.
“The UK banking sector looks strong. NatWest has followed its peers in calling out a slowing of some of the headwinds that have been impacting performance in recent quarters. Customers shifting to higher-rate accounts is slowing as expected, impairment rates on loans have stabilised at low levels, the economic outlook has improved, and balance sheets remain strong.”
