The FTSE 100 the benefits of its strong weighting towards commodities once more on Tuesday as strong results from BHP buoyed the miners.
BHP revealed record profits in 2021 as EBITDA jumped to $40.6 billion and attributable profits soared to 173%. However, it was not so much the ignited confidence in markets, rather their outlook on China and their demand for commodities in 2023.
“Despite China’s fragility, commodity giant BHP Billiton sees it as the more reliable source of revenue ahead, while other advanced economies face more of a struggle amid rising inflationary pressures,” said Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown.
As Streeter notes, advanced economies are facing difficulties due to rising prices and the FTSE 100 demonstrated again that it is not a representation of the UK economy as it rose 0.5% in mid afternoon trading on Thursday.
This was after data showed UK wages fell 3% and job vacancies declined for two years, raising concerns the cost of living crisis was starting to feed through to the job market.
“The FTSE 100 enjoyed steady gains despite continuing signs of economic turmoil in the UK,” says AJ Bell financial analyst Danni Hewson.
“In a sign of the weaker backdrop, the number of job vacancies fell for the first time in two years, although it is not a clear picture, with serious issues filling roles in certain sectors.
“This makes life difficult for the Bank of England as it looks to bring down rampant inflation without inflicting too much pain on businesses and households.”
Housebuilders and Financials
The pain Hewson mentions was evident in domestically facing FTSE 100 stocks such as housebuilders and financial. Rightmove again fell after warning of a slowing housing market yesterday and Taylor Wimpey, Persimmon and Barratt tracked them to the downside.
Oil rebound
Oil prices had been in downward spiral in recent days as concerns over global growth took Brent back beneath $100. A reprieve in selling helped oil major BP and Shell support the index and further offset concerns in domestic stocks.
