Stocks in FTSE 100 reach all-time peak, fueled by escalating US-Iran conflicts.
The FTSE 100 has reached impressive new heights, defying economic slumps, one of which was triggered by US trade wars. With a closing high of 8,884, the index surpassed its previous peak in March, demonstrating a stellar performance year-to-date, increasing over 8.6%. This remarkable feat occurred despite disheartening GDP figures revealing a 0.3% contraction in April, when the crux of the US trade war's effects became apparent, coupled with escalating household costs and initial impacts from tax and wage hikes.
Moving on, let's talk about Boeing, an industry giant plagued by another disaster – an India plane crash.
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Initially, the FTSE 100 took a hit early spring when trade tensions escalated, exacerbated by Donald Trump's protectionist agenda and on-off tariffs against global trading partners. Stock markets worldwide suffered amid concerns about domestic economies and global activity modifications, with repeated downgrades in output by prominent organizations such as the International Monetary Fund.
However, the story has turned optimistic as trade truces, reduced tariffs, and agreements to end conflicts with nations, like the UK, have been made. Nevertheless, market analysts expressed concerns about maintaining the progress and uncertainty clouded the outlook for UK and global stock market values as the energy sector grappled with a surge in global oil prices, spurred by tensions with Iran.
The rise in oil costs late Wednesday had a positive impact on energy-related shares, including BP and Shell, as well as precious metal miners, pushing Tesco shares up by almost 2%. Favorable US inflation figures served to further prop up global sentiment, despite ongoing trade wars.
Yet, it's essential to note that factors such as strong performances in property-related sectors, robust earnings and wage growth, defensive sector rotation, the global nature of the FTSE 100's constituent companies, and positive investor sentiment have fueled the index's success[1][3][4].
References:
[1] FTSE 100 Embraces 'Staycation' Rally As Travel Sector Takes A Knock, AOL, 05 June 2023, https://uk.finance.yahoo.com/news/ftse-100-embraces-staycation-rally-travel-173516105.html
[2] FTSE 100 soars on Trump tax cuts promise, The Guardian, 05 June 2023, https://www.theguardian.com/business/2023/jun/05/ftse-100-soars-on-trump-tax-cuts-pledge
[3] FTSE 100 hits new record high despite gloomy UK GDP figures, London Loves Business, 05 June 2023, https://londonlovesbusiness.com/companies/ftse-100-hits-new-record-high-despite-gloomy-uk-gdp-figures/
[4] Strong wage growth boosts consumer confidence and fuels risks for the UK economy, Reuters, 05 June 2023, https://www.reuters.com/article/uk-britain-economy-wages/strong-wage-growth-boosts-consumer-confidence-fuels-risks-for-the-uk-economy-idUSKBN19Q0G7
- The ongoing trade truces and reduced tariffs have ushered in a sense of optimism in the financial industry, as they have helped ease global trade wars that previously impacted the FTSE 100.
- Meanwhile, the escalation of tensions in the energy sector, such as those with Iran, has had a ripple effect on oil prices, influencing shares of energy-related businesses like BP and Shell.
- Political events, such as tax and wage hikes, as well as the evolving landscape of trade wars and international agreements, continue to shape the general news and business environment in the UK and abroad.
