FTSE 100 sees early gains pared as backslapping in Davos recommences

  • FTSE 100 rises 61 points
  • Kingfisher tops the blue-chip risers after first-quarter update
  • Rotation into value stocks continues

After a bright start, London’s blue-chips have remembered it is Monday morning and calmed down a bit.

The FTSE has risen above 7,400 but having also cruised above 7,450 earlier this morning it is now back down to 7.444, up 54 points (0.7%).

Today sees the second day of the World Economic Forum (WEF) in Davos. The WEF claims to be an independent international organization committed to improving the state of the world while others claim it is a fabulous networking event where the rich and powerful can work on their backslapping skills.

Sanctions, the war in Ukraine and the energy crisis are likely to figure prominently on the talking shop’s schedule.

8.45am: Kingfisher leads the market higher

The FTSE 100 has got off to a positive start, led by DIY retailer Kingfisher PLC (LSE: KGF) after its first-quarter results.

London’s index of leading shares was up 61 points (0.8%) at 7,451.

“A note of resilience has struck the FTSE 100 and FTSE 250 as the flight away from more risky high growth stocks continues amid continued worries about high inflation. The fight being waged by central banks to limit the consequences of rampant inflation is playing on investors’ minds, and many are seeking out defensive positions in mining, energy and healthcare, ”said Susannah Streeter at Hargreaves Lansdown.

“Kingfisher has raced to the top of the FTSE 100 leader board hammering out a strong performance as our demand for DIY stays strong. The booming interest in home improvements seen over lockdowns appears to be settling in as a source of longer-term customers for the B&Q and Screwfix owner. First-quarter sales were significantly ahead of its performance pre-pandemic, up 16.2% on a three year basis, although down 5.4% year on year. This shows that a sizeable chunk of customers that picked up a hammer for the first time have kept coming back, thanks to their new skills and a shortage of labor in the building trade. It’s also managed to deftly manage ongoing supply chain issues, with product availability improving even as the price of raw materials has stayed volatile. Investors are being rewarded with another share buyback program with another £ 300 million being distributed, ”she added.

6.20am: Flight to value expected to continue

The FTSE 100 looks set to benefit from a flight to value with investors largely ignoring the stuttering start to the week in Asia.

According to the spread betting firms, the UK blue-chips benchmark will open 43 points to the good at 7.439.98 – carrying where it left off on Friday.

Wall Street ended the week flat, while the MSCI Asia-Pacific opened with little fanfare. Chinese shares were hit with a flurry of selling, mainly across the technology sector.

Analysts said that inflation and higher interest charges with the added complication of the Ukraine war continue to haunt global equity markets.

“As we look ahead to another week the main debate continues to be over whether we’ve seen peak inflation, and if so, how quickly can it fall back from current levels,” said Michael Hewson of CMC Markets.

This week we’ll get a further insight into the state of the US economy with the publication of first-quarter gross domestic product data, the Federal Reserve minutes and April ‘print’ for personal spending and income.

Closer to home, the UK government will provide an insight on its finances for the year to April on Tuesday with higher rates of inflation likely to have pushed up the cost of interest payments on debt.

After a flurry of Footsie stocks, this week’s news flow will come from the mid-caps with Marks & Spencer, Severn Trent and SSE the pick of an underwhelming bunch of corporate reporterts.

Around the markets

  • Pound US $ 1.2544 (-0.51%)
  • Bitcoin US $ 30,127.60 (-0.41%)
  • Gold US $ 1,860.00 (+ 0.61%)
  • Brent crude US $ 113.28 (+ 0.65%)

6.50am: Early Markets – Asia / Australia

Asian shares were mixed on Monday even as the S&P 500 in the US briefly fell into bear market territory (20% or more drop from recent high) on Friday’s session.

The Shanghai Composite in China gained 0.10% while Hong Kong’s Hang Seng index fell 1.08%.

Japan’s Nikkei 225 was trading 1.12% higher and South Korea’s Kospi rose 0.17%.

Australia’s S & P / ASX200 lifted 0.10% as Anthony Albanese was sworn in as the country’s prime minister after his Labor Party defeated Scott Morrison’s conservative government in an election on Saturday.

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