FTSE 100 breaks 8400 as UK exits recession

Equities

Last week, the FTSE 100 continued its upward trajectory, marking a record high for the fifth consecutive session. The index ended the day 0.6% higher, pushing past the 8,400 mark earlier in the session. The British economy's exit from recession, accompanied by stronger-than-expected growth figures for the first quarter of the year, buoyed investor sentiment. The mid-cap FTSE 250 also celebrated gains, closing 0.6% higher, reaching its highest level in over two years.

Vodafone Group saw its shares increase by 1.9% following the British government's conditional approval of the proposed merger between Vodafone's UK operation and Hutchison's Three UK. Anglo American also enjoyed a rise, with its stock price up by 1.4% amid reports that Rio Tinto had considered making an offer for the company. Conversely, Rightmove Plc saw shares falling 5.5% after the real estate portal revised its Average Revenue Per Advertiser growth forecast downward, contributing to a 1.3% drop in the broader real estate index.

Across the Atlantic, the performance of US indices was more mixed. The Dow Jones Industrial Average rose by 0.32%, while the S&P 500 saw a modest increase of 0.16%. The Nasdaq Composite, however, slightly declined by 0.03%.

Nvidia climbed 1.3% after Taiwan Semiconductor Manufacturing Co, a key supplier, reported a nearly 60% jump in April sales. Novavax shares surged by a remarkable 98.7% following news of a lucrative licensing deal with Sanofi for its Covid-19 vaccine, potentially worth up to $1.2 billion. Meanwhile, SoundHound AI experienced a 7.2% increase after surpassing first-quarter revenue expectations.

Forex & Commodities

The dollar remained stable against major currencies as markets awaited upcoming U.S. inflation data, specifically the consumer price index (CPI), to gauge potential interest rate cuts later this year. Following mixed economic signals and cautious comments from Federal Reserve officials, expectations for a rate reduction by September have grown. The dollar index held steady, reflecting its resilience amid economic uncertainty. Meanwhile, the yen faced potential intervention risks due to recent volatility, with traders closely monitoring its movement against the dollar, which has seen significant fluctuations after suspected interventions earlier in the month. The currency landscape remains tense as investors also await CPI data from the euro zone, influencing positions in the euro and sterling as well.

In commodity markets, gold prices experienced an increase, with spot gold reaching $2,369.49 per ounce, propelled by recent weaker US jobs data which augmented speculations of an impending rate cut by the Federal Reserve. This optimism was mirrored in US gold futures, which saw a 1.5% increase.

Conversely, oil prices witnessed a slight decrease, with Brent crude futures dropping to $82.72 a barrel and US West Texas Intermediate crude dipping to $78.21 a barrel. This decline in oil prices is partly attributed to a strengthened US dollar, making oil more expensive for non-dollar holders, coupled with signals of weakened fuel demand as evidenced by rising US gasoline and distillate inventories.