The FTSE 100’s Switchback Ride Continues And Is Now Heading Up Again
Just over a year ago the FTSE 100 Index reached its highest-ever level of 8,047.10 – now look at it.
In mid-March 2023 it was down to 7,335, a month later it hit 7,914.
By 7th July it had fallen to its lowest point at 7,256, by the end of that month it was back up to 7,699.
Three weeks later it was back down 7,257, followed by 7,731 on 20th September.
By 27th October it had fallen back to 7,291.
But since that point it has seen a steady two-month climb back up to 7,733 by 29th December.
A near-300 point easing back by 17th January to 7,446 was as swift as the previous market falls over the last year.
With the Dow Jones Index currently at its highest-ever level it is worth considering where our market barometer is heading.
So, what do I conclude?
Very simple really – with yesterday’s FTSE 100 Index closing at around 7,644 I am hoping that it will go above the 7,750 level very shortly.
A move above that point, while still ahead of the 6th March Budget announcement, could presage a stronger surge to above the 8,000 barrier once again.
Such Index strength would provide quite an important lift in investor interest to the UK market as a whole – which has to be good news.
(Profile 01.02.24 @ 7,644 set a nearby Target Aim of 7,750)
Business optimism Said To Be Running High
It is encouraging to note that the Lloyds Bank monthly confidence index rose to some 44% in the last month against 35% in December.
The bank states that the latest level is the highest since 2016, which is interesting news.
There does seem to be a general anticipation of lower interest rates coming into force very shortly, certainly taking the 15-year highest level of 5.25% down a peg to 5% perhaps.
The bank reported that a third of its reporting companies were looking to increase their workforces over the next year – which is very encouraging.
I am from the old school of economics – looking for mass employment and increased commercial spending to help to boost the UK economy.
Job vacancies are reported to be falling at the fastest rate since 2020, with the 930,000 empty positions in December 2023 being some 7% down on the previous month, and down nearly 13% year-on-year.
But Is It Reflected Out There In The Commercial Environment?
I noted that company insolvencies are running at their highest level for over 30 years, with some 25,158 firms collapsing in 2023, blaming rising prices and higher tax rates.
The Centre for Economics and Business Research considers that Britain may well have slipped into mild recession in the latter part of last year.
But it also stated that the UK is now on the path to recovery – yeah, that is good news then.
On the other hand, we must take into account that a record number of businesses have been announcing warnings of possible profit expectations not being met.
According to the latest EY-Parthenon consultancy service report, in fact 294, some 18.2% of UK listed companies, last year issued profit warnings, which was way above the previous high figure of 17.7% of companies giving similar declarations in 2008, which was the peak of the last major financial sector collapse.
Food Imports To Rise At Cost Of Over £500m
Post-Brexit easing of certain cross-border regulations may have been evident to some, but food and drink importers might now be disagreeing with EU trade friction becoming very evident.
Cross-border checks now being imposed could not only lead to higher prices but also bringing about the possibility of certain stocks actually being impounded.
There is a certain inevitability that prices will rise again in reaction.
But lower grocery prices are being proudly lauded by Sunak and crowd.
My question is whether anyone is doing the sums of goods that have shrunk in size and quantity that have helped to bring about the price falls?
Rates Up 5%
Local councils are now set to raise council tax rates charges by 5%, which will be sucking in another £2bn per annum.
That may be good news for local areas regulated by councils that are run efficiently, but a great number are not.
More local councils have fallen into bankruptcy over the last 18 months than in the last 30 years.
Hopefully that might be great news for those seeking nearby potholes to be repaired, but I don’t think that will happen too soon.
On the other hand, the 6th March Budget may well contain a much-needed measure of Government expenditure to help fill the cracks and fissures in the UK highways – wouldn’t that be good?
House Prices Rose A Fraction In January
It has been reported by the Nationwide Building Society that a slight mood of optimism has shown through in the residential housing market in the last month.
Supposedly on the back of easing mortgage rates, it is now apparent that the annual contraction in house prices eased in January to minus 0.2%, from minus 1.8% in December 2023.
However, the average house price was some £16,000 down on the £273,750 peak of August 2022.
Further price rises could well be recorded as mortgage rates ease back over the next few months.
Price Of Gold Ready To Rise Again
Reflecting happenings around the world, it is perhaps not too surprising to see the way that gold futures have risen from $1,816.60 on 5th October 2023, to a very much more reflective $2059.60 an ounce last night.
It touched $2,087.30 on 29th December last year, before dropping back to a 2024 low of $2,012.10 on 25th January.
The latest report from the World Gold Council states that:
“Broadly, we look for total investment demand to strengthen in 2024, and – together with continued strong buying interest from central banks – to offset expected weakness.
Total supply is likely to see a small increase, with a probable record for mine production and relatively steady recycling.”
Despite possibly strengthening market indices globally, I have a fancy that the price of the yellow metal is ready to climb back up towards its peak $2135 fairly soon.