The Financial Times Stock Exchange (FTSE) 100 Index is a bit of a hodgepodge, encompassing around a third of the total market. While some of the bigger constituents have been up, the main index is down. Nonetheless, the leading shares are soaring.
One of the most important things for investors to consider is the state of the economy. The good news is that the UK’s economy is far from recessionary, although it is still not immune from some of the ills that plagued the country before. That said, inflation has increased and wage growth is slowing, both of which are the major concerns of the Bank of England and other central banks. To mitigate this risk, the central bank has been buying long-dated gilts in order to stabilise the markets. This is just one part of a wider plan to cut the nation’s debts, which includes cuts to spending and interest rates.
The FTSE 100 is a benchmark for both UK and global stocks, and it’s important to note that it is only a small part of the overall economy. For example, only about a quarter of the revenue that goes into the FTSE 100 comes from the UK. However, despite this, the index’s relative performance in the global equities market is not too shabby.
Among the other key indicators of the health of the economy, a recent report from the BBC stated that Drax Group is using diseased trees in its manufacturing processes. In addition, the company was caught cutting down primary forests in Canada. These were just two examples of some of the many corporate scandals that have sprung up in recent years. It’s no surprise then that the media has been in a frenzy over these stories.
A few other noteworthy economic stories include the news that China has reopened its doors for business. The reopening has spurred optimism among investors, and it’s not hard to see why. There’s been a hefty increase in the cost of raw materials, and the cost of goods and services has increased by 43.3% in the past year. But with a warmer winter looming on the horizon, Europe might be able to avoid a full-blown energy crisis.
On a related front, the US economy’s latest jobs data has been a disappointment, with job openings falling more than predicted. While the government’s fiscal stimulus plans have been a boon for the nation’s workforce, it’s not clear that they will be enough to lift unemployment numbers. Despite these setbacks, a recent study found that average UK earnings rose by more than six percent in the past year, the highest in almost two decades.
The FTSE is expected to open a bit higher on Tuesday. Interestingly, some companies have already released their Q4 results, including Greggs PLC, which has reported a nine-percent rise in net profits. The company also announced its forecast for the rest of the year. With the announcement, the company’s price target was raised by Jefferies from 800p to 930p.