The FTSE 100 traded sideways for most of Friday’s session after a sell-off of US equities overnight on revisions to interest rate cut expectations spilt over into the European session.
Federal Reserve Chair Jerome Powell’s comments overnight sent US equities into a tailspin. Powell signalled that the Fed was in ‘no hurry’ to cut rates amid robust economic conditions.
While the assessment of the US economy is excellent for ‘Main Street’, Wall Street did not welcome the potential consequences for monetary policy. Major US indices faced their biggest bout of selling since the US election, and the weakness was evident in US futures again on Friday.
This naturally sapped the enthusiasm out of European equities in early trade, and poor UK GDP gave investors very little to cheer about. Another eyebrow-raising appointment by Donald Trump also weighed on the FTSE 100’s pharma heavyweights, offsetting strength in mining companies and banks.
“Pharmaceutical stocks left the FTSE 100 looking sickly on Friday morning as AstraZeneca and GSK shares came under pressure,” says AJ Bell investment director Russ Mould.
“The announcement of vaccine-sceptic Robert F. Kennedy Junior as health secretary pick for the incoming Trump administration has spooked investors in the sector, with US drug companies also seeing their shares come under significant pressure overnight. The impact on the sector is hard to judge fully at this stage but, at the very least, it will cause a good deal of uncertainty.
“The latest UK GDP figures offered evidence of the chilling effect of a Budget build-up filled with warnings about hard decisions. The government’s gloomy messaging proved to be a self-fulfilling prophecy as growth slowed significantly.”
Upbeat Chinese retail sales were the key driver of gainers for mining shares Anglo American, Glencore, and Rio Tinto which all helped provide support for the FTSE 100 and balance out selling elsewhere.
Land Securities was the top FTSE 100 riser after the Real Estate Investment Trust issued an encouraging assessment of trading conditions and highlighted an uptick in rental values.
“Our operational outperformance continues, with further growth in occupancy and positive rental uplifts across our retail and London portfolio, which is translating into accelerated income growth,” said Mark Allan, Chief Executive of Landsec.
“Combined with our focus on cost efficiencies, we therefore raise our outlook for EPRA EPS and now expect FY25 to be in line with last year’s level despite £0.5bn of net disposals over the past year, and for this outperformance to flow through into FY26.
“At the same time, property values have stabilised, with growth in rental values driving a modest increase in capital values, resulting in a positive total return on equity. We expect these trends to persist, as customer demand for our best-in-class space remains robust and investment market activity has started to pick up.”
