The FTSE 100 found a response to rising interest rate tensions and souring sentiment on Thursday as early losses were met with a bid for Uk stocks in early trade.
Markets had been almost euphoric at the beginning of May so the step down in sentiment was to be expected, yet it still doesn’t soften the blow for investors looking at a FTSE 100 that’s fast approaching the 8,000 mark.
We noted earlier in the week a raft of Federal Reserve speakers would be scrutinised for their comments on inflation and interest rates and the mood music hasn’t been favourable with bond yields rising.
“Treasury yields have risen to four-week highs, following relatively cautious comments from the Federal Reserve about the interest rate cutting cycle, which has dented market confidence,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
Concerns about US rates inevitably translate to concerns about UK interest rates, and the poor overnight session in the US played a part in the FTSE 100’s decline early on Thursday.
Although the index started in the red, London’s leading index staged a midmorning rally and turned positive with the index trading at 8,197, up 0.17% at the time of writing.
With important US PCE data set for release later in the session, one would expect a choppy day for stocks as traders react to expectation of when the Federal Reserve will cut rates.
“European markets dug their heels in and tried to stop the declines that dominated yesterday’s headlines. The FTSE 100 was firm, the IBEX 35 nudged ahead 0.7% and the Dax dipped 0.2%. Stability is welcome, but pre-market indicative prices point to another bad day on Wall Street so the jury is still out whether today is going to end up being another difficult session for equities or not,” said Dan Coatsworth, investment analyst at AJ Bell.
Autotrader
Autotrader accelerated to the top of the FTSE 100 leaderboard on Thursday after posting upbeat full-year results in which revenue grew 12% despite a general slowdown in new car sales. The company has enjoyed a buoyant second-hand car market that sees second hand cars no selling faster than before the pandemic.
“It’s hard not to be impressed with Auto Trader’s rise since its 2015 IPO. The UK’s largest online automotive marketplace has been shifting through the gears, generating increasing returns for its shareholders while showing no sign of slowing down,” said Mark Crouch, analyst at investment platform eToro.
“Despite the onset of inflation in 2021, causing revenues to stall, the company has since stepped on the gas and revenues per user have rebounded to record highs in each of the following three years. It’s little surprise then that this morning’s full year earnings report is more of the same. Revenues, profits and cash flow have all moved higher.
“Auto Trader has made itself indispensable to buyers and sellers in recent years. With at least 80% of buyers using Auto Trader, this has resulted in franchise retailers, manufacturers and private sellers turning to Auto Trader as a matter of course.