The FTSE 100 underperformed European peers on Thursday as the inverse relationship with the pound stopped the index in its tracks.
Despite strong gains in the house builders and Royal Mail, the FTSE 100 failed to produce the gains evident in European indices as the miners, energy companies and consumer stocks earning a large proportion of their revenue overseas fell.
“The FTSE 100 continues to drift having fallen just short in its effort to reclaim pre-pandemic levels,” says AJ Bell investment director Russ Mould.
“Once again, the index is left in the miserable position of being shown up by its global peers, many of which had put their Covid losses behind them months ago or even longer. In a global index sports team the FTSE is getting picked dead last.
“Mounting inflation has helped drag the index back as it raises the likelihood of a pre-Christmas rate rise, thereby boosting the pound. When some 70% of its constituents’ earnings are derived from overseas, strength in sterling isn’t that helpful.”
The housebuilders and REITs were among the FTSE 100’s top risers on Thursday a day after the ONS released data showing house prices rose 11.8% in the year to September.
Persimmon was the FTSE 100’s top gainer in mid morning trade on Thursday, shaking off any concerns about the impact of higher rates on the UK housing market.
British Land rose following news yesterday it saw strength in its retail parks portfolio where footfall and sales were 98% of pre-pandemic levels.
“We have delivered good financial and operational performance. Strong leasing activity, significantly improved rent collection and increasing values across our Campuses and Retail Parks have driven 6.1% total returns in the half,” said Simon Carter, British Land CEO.
Royal Mail was also higher after releasing a robust report showing progress in their strategic review and a jump in parcel deliveries. The group said they would return £400m to shareholders.