The FTSE 100 was gaining momentum on Friday as the index benefitted from improving sentiment in global equities.

The FTSE 100 was 0.55% higher at the time of writing while the S&P crept 0.2% higher after a strong session overnight.

Global equities began a move to the upside yesterday as interest rate markets priced in a pause in US rate hikes.

“The markets continue in a holding pattern with the FTSE 100 stuck in a tight range between 7,700 and 7,800 as investors await key economic data which could set equities on a path up or down,” said AJ Bell investment director Russ Mould.

“Today was a positive day for UK stocks despite warnings overnight from a Federal Reserve official that the end to the rate-hiking cycle might not come as soon as Wall Street hopes. 

“Investors will be hunting for clues on the direction of monetary policy from Fed chair Jerome Powell when he addresses a conference in Washington later on Friday.”

The fallout from Powell’s speech may have ramifications for the start of European trade on Monday.

FTSE 100 movers

The top movers were driven by mean reversion on Friday as stocks with sharp swings yesterday moved to cover a degree of their fluctuations.

BT was the FTSE 100’s top riser a day after sinking following the release of their final results. BT shares were 3% higher at the of writing.

Conversely, JD Sports, down over 6%, was the top faller after gaining on the back of results yesterday.

However, Burberry suffered another day of selling after warning they would face unfavourable economic conditions for the rest of the year. Burberry was another 3.8% weaker at the time of writing.

Although we are yet to learn the exact date of Tekcapital’s MicroSalt IPO, the recent news flow would suggest things are beginning to heat up.

Today, Tekcapital announced MicroSalt have brought in Rick Stein’s son Jack as a brand ambassador. Such a significant move signals the company is positioning itself towards the UK market.

“I am absolutely delighted to be working with MicroSalt to show how a true low-sodium salt can produce the same taste while providing significant benefits to health. As a chef, salt is the most important ingredient, and this product is game changing, said Jack Stein, Chef Director for Rick Stein.

Mr Stein will help develop MicroSalt’s culinary audience and educate consumers about the health benefits of lower sodium consumption.

Today’s announcement follows yesterday’s news MicroSalt had secured distribution in an additional 400 US stores.

MicroSalt has recorded many successes with distribution agreements across 1000s of US stores, including Kroger – one of the United States’ largest supermarkets.

The move to align themselves with a prominent UK chef highlights intentions to raise their profile in the UK, not only for a possible product launch but for a listing on AIM.

MicroSalt appointed Zeus Capital as their NOMAD last year in preparation for an AIM IPO. Tekcapital previously said they were targeting an IPO in 2023, but with the current state of capital markets and near-constant commercial updates, it is understandable why MicroSalt are biding their time.

The FTSE 100 edged higher on Thursday in a broad global equity rally which saw European and US equities gain.

Downbeat economic data has been responsible for stock declines so far this week. However, the deterioration in US data has caused a shift in market expectations of interest rate trajectories.

Markets now predict the Federal Reserve will pause interest rate hikes in the coming months. On Thursday, the prospect borrowing costs will not increase again in the short term helped support sentiment and risk assets.

The FTSE 100 gained 0.2% on Thursday, while the S&P 500 had jumped 0.4% at the time of writing.

Despite improving sentiment on Thursday, analysts cautioned the looming debt ceiling could bring today’s positivity to an abrupt end.

“Despite this positive sentiment, there remains a large elephant in the room. Joe Biden is dangerously close to the 1 June deadline to reach an agreement on raising the US debt limit, otherwise the US government will default on its bills,” said Russ Mould, investment director at AJ Bell.

“That could cause all kinds of problems with federal workers and to the US economy and likely cause a global stock market correction.”

FTSE 100 movers

A day after saying they were targeting record £1 billion earnings this year, JD Sports received broker upgrades sending shares over 5% higher. JP Morgan has hiked their price target to 215p from 210p.

JD Sports shares were 5.4% higher at 172p at the time of writing.

BT

BT shares sank on Thursday after the telecoms group announced full-year results. Revenue was down 1%, and operating profit slipped 12%.

The group is taking steps to cut costs by slashing 55,000 jobs, but concerns about cash generation sent the stock down by around 5%.

“Headlines will no doubt focus on the job cuts, with up to 55,000 to come over the next decade as BT looks to find more ways to cut costs despite a cost-cutting plan already delivering £2.1bn in savings. It’s drastic, but it’s not overly surprising given the mounting costs and slim margins in the wider business,” said

“Once the Openreach and 5G networks are built out the strategy shifts to monetising the infrastructure that’s in place and leveraging new technologies to do that. Progress on both is looking promising, BT’s 5G now covers 68% of the population and Openreach is on track to reach 25m premises by 2026. 

“Challenges are looming, though, not least a pension review in the coming months that’s likely to result in a write-down, which will add to the burdens on cash, whether in the form of increased payments now or an extension to the deficit recovery timeframe.”

Burberry

Burberry shares were over 5% weaker following the release of full-year results. Burberry saw improvement last year as China reponed, but kept guidance the same and highlighted poor macroeconomic conditions.

Investors took the comments as a signal to book profits in the company after a bumper run in the stock.

Burberry shares were down heavily on Thursday after the luxury brand suggested the macro environment was not conducive to substantial growth in the year ahead.

Reported operating profit rose 21% in the year to 1st April compared to the year prior. The company benefited from returning tourists after the pandemic and removing restrictions in mainland China.

Although the brand enjoyed the return of Chinese tourists, the associated jump in sales activity may prove transitory.

“Burberry’s sales have been boosted by the resurgence of Chinese tourists in Europe. Nevertheless, our experts caution that this lift is likely to be short-lived as an uneven economic rebound in China puts the shackles on some travellers,” said Zainab Atiyyah, Analyst at Third Bridge.

Over the past year, luxury stocks have been somewhat of a safe haven in the consumer-facing retail sector. However, the possibility of a broad downturn and flat guidance spurred a bout of selling of Burberry shares on Thursday.

“Having a wealthy clientele is an advantage in the current economic climate as Burberry’s typical customer is going to be less affected by the rising cost of living than someone whose pay packet is almost entirely gobbled up by bills and everyday essentials,” said Russ Mould, investment director at AJ Bell.

“However, that doesn’t mean Burberry is immune from an economic downturn. We’ve seen in recent months signs of cracks in the luxury goods market. Diamond prices have been falling, so too the value of second-hand luxury watches as the market is flooded with supply.

“The fact Burberry hasn’t lifted its guidance for the new financial year after reporting such a strong set of results, and reference to it being ‘mindful’ of the macroeconomic and geopolitical environment, appear to have been the trigger for some investors to take profits in the stock, with the share price falling more than 6% on the latest news.”

Burberry shares were down 6.7% at the time of writing on Thursday but are a solid 48% higher over the past year.