Proactive Investors -
- FTSE 100 down 24 points
- US markets suffer overnight
- Company news at a premium
FTSE 100 has staged a modest rally from its early dip and now sits at 7,473, down 24 from the start of the day.
Scottish Mortgage Trust is leading the recovery adding 1.3% at 699p, comfortably putting it top of the big cap risers and a little surprising given its tech bias and the beating this week for some of the big sector names such as Apple (NASDAQ:AAPL),
Not that investors will be getting too carried away as year-to-date SMT shares are still down 47%, which will put it firmly on the bottom rung when the numbers for 2022 are finally added up.
FTSE 100 overall has not had too bad a year, even so, something that Ipek Ozkardeskaya, senior analyst at Swissquote Bank has been analysing.
FTSE 100 well ahead of S&P 500
"Britain’s 100 biggest companies are preparing to close the year with small gains, while the S&P500 has lost more than a fifth of its value.
"Why?" she asks before answering.
"First, British companies had to compensate for the weakening sterling this year – but that’s also true for the DAX, for example, but the DAX is also preparing to end the year around 15% lower. So, it’s not only an FX story.
"Second, and the most relevant, the fact that the FTSE 100 is heavily crowded in energy and mining stocks is what made the FTSE 100 perform so well this year.
"Among the biggest market caps, BP (LON:BP) and Shell (LON:RDSa) are up by more than 40% each ytd.
"Plus, British big caps make most of their revenues in terms of US dollars; a good thing for a year when sterling lost up to 23% against the greenback at some point and is still down around 10% right now.
"And I believe that the FTSE 100’s outperformance could stretch into the new year. If the Chinese reopening brings along another bump in inflation due to higher energy and commodity prices, the FTSE 100 could continue offering a good shelter to those willing to hedge against an energy-led global inflation to temper the negative effects.
"Of course, the biggest British companies do not reflect the underlying British economy, so the FTSE 100’s good performance won’t change the fact that smaller, and domestic-focused companies will likely continue to suffer from high inflation, recession and perhaps another year of political turmoil as a cherry on top."
FTSE 100 opens 54 points down
FTSE 100 reacted badly to the slide in US prices overnight, opening 54 points lower at 7,442 with BT Group (LON:BT) the worst of the bunch.
Wall Street had a tough day Wednesday with Apple in the firing line on production concerns in China, but there were also sell-offs among oil shares and airlines as the US ‘bomb-cyclone’ continues.
Adding to the drift today was the almost complete absence of any significant corporate news bar Antofagasta (LON:ANTO), with the copper miner reporting that access to its Los Pelambres mine in Chile has been blocked by protestors. Shares dipped 1% to 1,568p.
Otherwise, brent crude continues to ease lower and was down a further 0.5% today to $82.83 per barrel, with BP and Shell following the trend and shedding 0.7% and 0.4% respectively.
Gold though is showing no signs of losing its appeal according to the World Gold Council, which reports demand for the metal is the highest it has been for 55 years with central banks buying almost 400 tonnes of gold in the third quarter of this year.
It reflects “reflective of the geopolitical uncertainty now weighing on global policy setters," said the trade body.
Among the small caps, Netscientific responded to more good news from its portfolio company PDS’s ongoing cancer treatment trial and rose 7% to 71.5p, but Allergy Therapeutics plummeted 56% on another delay to its accounts for the year to June.