The FTSE 100 eased on Friday after a strong week of gains that saw the index trade at the highest levels since the beginning of the pandemic.

The FTSE 100 was trading 7,627, down 0.4% going into the close on Friday. Although the index was down on Friday, the FTSE 100 rebounded from sharper selling earlier in the session to trade marginally above key support levels around 7,620.

Trade was led by US equities which sank overnight on fears around inflation and interest rates. This meant the FTSE 100 opened lower, but later tracked the recovery in US futures higher during the session.

UK GDP

Markets learnt of the UK’s strong economic performance in 2021 on Friday but the bumper reading did little to inspire confidence.

Investors seemed unimpressed with the UK’s 7.5% growth in 2021 with domestic facing sectors such as housebuilders barely moving.

GDP is backward looking economic indicator and despite grinding out 1% growth during the ‘lockdown by stealth’ in Q4, both households and investors will be looking forward to conditions in 2022 with soaring inflation and the prospect of multiple rate hikes.

“Will 2022 see the UK quickly shake itself off after December’s blip or will supply constraints and those rising prices keep the lid on things?  One percent growth in Q4 is pretty good going when you think about those empty high streets dressed up for a Christmas party that never took place.  Household consumption has been a key factor in the UK’s growth story, the question is will households still have the fire power as additional budget pressures exert a choke hold,” said Danni Hewson, AJ Bell financial analyst.

Overseas earners

With the majority of shares in the FTSE 100 down on Friday, those that showed some signs of positivity were predominately companies that earn a large proportion of their revenue overseas.

Unilever rebounded from selling yesterdays as investors contemplated the company’s strategy and decision to proceed with share buybacks and hold off on any major acquisitions. Unilever shares were 3.3% higher at the time of writing.

Energy companies continued their rally on Friday as BP and Shell gained. Miners were mixed as copper miner Antofagasta pushed 2% higher but Rio Tinto, Glencore and Anglo American fell.

Betting companies Entain and Flutter also gained as investors positioned for the relaxation of betting laws in the US.

AstraZeneca revenues surged in 2021 as the Pharma giant rolled out the COVID-19 vaccine and saw strong growth in oncology and immunotherapy drugs.

AstraZeneca revenue rose 41% (38% at CER) to $37.4bn including COVID-19 vaccine sales and 26% excluding vaccines sales.

“Astrazeneca’s results showed  a total revenue increase of 41% to $37,417m including COVID-19 vaccine revenues. The company managed to achieve 14 positive Phase 3 readouts across nine medicines in 2021, and 22 regulatory approvals and authorisations in major markets which further boosted its market dominance in the field,” said Walid Koudmani, market analyst at financial brokerage XTB.

Astra will create a new business unit for their COVID-19 vaccines but in an interview with Bloomberg TV, the Astra CEO said they expected volumes to fall as we move out of the pandemic. Although vaccine sales boosted Astra’s sales, the overall impact of the pandemic on profitability was negative.

“Covid vaccine sales added $4bn to sales at AstraZeneca, but coronavirus had the opposite impact on profits. Outfitting staff with PPE and providing tests together with increased investment in vaccine and treatment development all weighed on the bottom line,” said Laura Hoy, Equity Analyst at Hargreaves Lansdown.

Hoy also highlighted the impact of acquisitions on Astra’s profit but was confident growth would support a dividend hike in the future.

“The real driver for Astra’s profit decline was the Alexion acquisition. The purchase brought Rare Diseases under the Astra umbrella and our fist glimpse at performance for this sector wasn’t too shabby. Management were confident enough in the promise of future growth that they announced a dividend hike,” said Hoy.

Astra shares were up 2.3% at the time of writing on Thursday morning.

Unilever achieved the fastest sales growth in nine years in 2021 but the impact of rising prices meany underlying operating profit margins were squeezed by 10 basis points.

Unilever recorded a 6.2% constant currency rates to €52.4bn, up from €50.7bn in 2020. The jump in revenue helped produce a 16% increase in net profit to €6.6bn, up from €6bn.

However, the market’s focus was on margin pressure and the impact of rising input prices.

“The promise of share buy backs and a softly-softly approach to acquisitions won’t give Alan Jope much of a break from the mounting criticism over the way the business has been run. Inflation is flashing as a big warning light in these results and the worst may be yet to come,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“Despite the fastest underlying sales growth in nine years, coming in at 4.5%, the fall in the underlying operating margin is already painful. Input costs are rising dramatically and prices are being pushed up as result by 4.9% in the fourth quarter.”

Although Unilever shares dipped over 3% in the initial market reaction, there were positives from Unilever’s results in the form of strong growth in emerging markets.

“Our thirteen billion-Euro brands grew 6.4%. Priority markets of China, India, and the US grew at 14.3%, 13.4%, and 3.7% respectively. Our growth in e-commerce was 44%, ahead of global channel growth and bringing e-commerce to 13% of turnover. We have continued to re-shape our portfolio into high growth spaces, acquiring in Prestige Beauty and Functional Nutrition, and agreeing the sale of our Tea business,” said Unilever, Chief Executive Officer, Alan Jope.

The Unilever CEO also addressed ongoing speculation around the revisiting of a bid for GlaxoSmithKline’s consumer business and said spare cash would be used on share buybacks instead.

“We have engaged extensively with our shareholders in recent weeks and received a strong message that the evolution of our portfolio needs to be measured. We therefore do not intend to pursue major acquisitions in the foreseeable future and will conduct a share buyback programme of up to €3 billion over the next two years,” said Jope.