The FTSE 100 started 2023 with a bang as the index rose above 7,600 in early trade, before falling back as the session progressed.
London-listed shares shrugged off pessimistic IMF comments on the health of the global economy suggesting most major economies could face a slowdown in the coming 12 months.
“UK shares kicked off the New Year with a bang despite gloomy predictions from the head of the IMF that one third of the global economy will be hit by recession this year,” said Russ Mould, investment director at AJ Bell.
“Kristalina Georgieva told CBS that the US, EU and China are all slowing simultaneously. This is unpleasant to hear but isn’t a shock to markets given the multitude of headwinds that gathered pace last year, namely high inflation and rising interest rates and the negative impact they have on business and consumer spending.”
The FTSE 100 was up 1.3% at 7,548 at the time of writing on Tuesday with 88 of the FTSE’s 100 constituents gaining.
Ocado had a choppy finish to 2022 and was again the top riser on Tuesday as the retail technology company bounced off a support level building at 620p.
The FTSE 100’s commodity companies helped lift the index as miners and oil companies rallied. Banks were also strong performers ahead of year that promises a period of higher rates.
“Mining and banks were also in demand on the UK stock market, suggesting that investors were split into two camps – one happy to take on additional risks and buy commodity producers in the belief that any global economic downturn will only be short lived, and the other opting for a more cautious approach. Banks have perked up on the stock market in recent months as investors bet that they will benefit from interest rates staying higher for longer,” Russ Mould said.
Rolls Royce was 5% higher at 97p after analysts at Jefferies raised the stock to a buy with a 125p price target.