A weekly roundup of the key movements and news from the FTSE 100, and the broader UK market.
Global growth concerns kill off rally
The UK’s blue-chip index started the week rallying 1%, but by midweek struggled to hold onto its gains, as the outlook for slowing growth resurged when the OECD downgraded forecasts for the world economy in 2019 to just 3.3% gains.
The FTSE 100’s downward trajectory only intensified towards the end of the week following the European Central Bank (ECB) unexpectedly taking action to help stop the downturn.
The central bank announced that it would help stimulate bank lending in the Eurozone by pushing back the date for another interest rate rise. It went on to say that rates would stay unchanged till the end of the year and that it would offer a series of cheap loans to banks.
With the Eurozone recording the slowest pace of growth in four years during the final three months of 2018, the ECB’s downbeat guidance has reiterated the point about just how bad the state of the world’s economy is in, putting investors on the back foot.
"The effect of the ECB’s dovish tilt is still being felt in markets this morning [8 March],” said Neil Wilson of Markets.com. “Not only has the euro and bonds been affected, but the downbeat note from the ECB rocked investor sentiment, sending stocks lower.”
“Not only has the euro and bonds been affected, but the downbeat note from the ECB rocked investor sentiment, sending stocks lower.” Neil Wilson of Markets.com
Slew of disappointing news sends the FTSE 100 down
The ECB’s recent adjustments to its monetary policy comes in the wake of the Bank of England and the US Federal Reserve taking similar action.
The Fed’s dovish shift was further supported when the US jobs report was released on 8 March, showing a rise of just 20,000 jobs, compared to expectations of 180,000 for February. The S&P 500, in turn, posted its biggest weekly loss of the year.
Coupled with China reporting worse than expected trade data for the month of February on 7 March, the FTSE 100 buckled under the wider economic woes and continued its tumble down by 53.24 points to 7104.31p.
The negative disparity between actual and predicted jobs for February 2019
In light of the recent sell-off, weak wages growth might just be enough to convince the market that the Fed is ready to call time on quantitative tightening, according to James Hughes at Axi Trader.
“Progress in the China-US trade talks would certainly be useful too, but that’s still absent and all told… it’s difficult to see why stocks will find cause to bounce in the near term,” Hughes concluded.
As concerns surrounding global economic growth continue to escalate further, the markets appear to be holding out, but without broad sustainable growth, concern is likely to increase further.
Alfie Stirling, chief economist at the New Economics Foundation, told the New Statesman: “Almost by definition, shocks are caused by uncertainty over events, rather than by events themselves.”
Rightmove best performing stock of the FTSE 100
It wasn’t all bad news though, as the FTSE 100 did start the week up 27 points at 7134p, boosted by the top-performing blue-chip stock of the day, Rightmove [RMV], which was rallying over 5% after Barclays raised its price target from 415p to 420p.
The online estate agent’s share price had slumped 5.6% in the week prior, despite announcing 2018 results that included a 10% jump in underlying profit to £203.3m, as well as a 10% rise in revenue. The strong financial performance was driven by the housing platform’s agency and new home businesses.
Rightmove's jump in underlying profit for FY 2018
A JP Morgan Cazenove note that found its business model was resilient, helped sustain the stock’s rally with Rightmove’s share price finishing the week up 0.23% at 497.35p.