The FTSE 100 was in the red on Wednesday as doubts about the US economy proved to be a catalyst for investors to take money off the table.
London’s leading index was down 0.47% at the time of writing. The S&P 500 had closed down heavily last night but started Wednesday’s session higher.
“Realisation is dawning that more ominous clouds are gathering over the US economy, causing fresh nervousness for investors,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Despite some better-than-expected results from the first of the big tech crowd to report, the darkening picture of consumer confidence has increased concerns about lower spending ahead.”
Although economists and market analysts increasingly predict a US recession, many feel it will be a brief, shallow contraction.
There is also a school of thought any recession will be a manageable contraction – and could spark the next leg higher in stocks.
The leading cause of any recession later this year will be inflation and associated higher borrowing costs. However, a recession would naturally bring inflation down, and central banks have ample room to reduce rates. This long-awaited pivot to rate cuts will likely be positive for equity markets.
FTSE 100 gainers
Encouraging trading activity in recent weeks sent Persimmon shares over 6% higher on Wednesday and were the FTSE 100’s top riser at the time of writing. Q1 2023 results were pretty poor for the housebuilder, but with shares down over 50% from 2021’s highs, one could argue the bad news is already baked into the cake.
Taylor Wimpey and Barratt Developments were over 3% higher in sympathy with Persimmon.
Standard Chartered rose 2.6% as Q1 2023 profits jumped 25%.
FTSE 100 fallers
CRH shares were 3.7% lower despite improved first quarter trading. However, confirmation the company would proceed with shifting its primary listing to the US saw investors sell their shares in the group.
The company said; “the Board had come to the conclusion that it is in the best interests of our business and our shareholders to pursue a US primary listing, together with US equity index inclusion as soon as possible.”
