London stocks recover; set for weekly drop as slowdown, inflation fears linger
By Bansari Mayur Kamdar
(Reuters) -UK’s FTSE 100 recouped losses on Friday towards the end of a volatile week, led by defensive stocks, but investor concerns over stubborn inflation and economic slowdown set the benchmark index towards its second consecutive weekly loss.
The blue-chip FTSE 100 rose 1.4% in early trade, tracking an overnight relief rally on Wall Street as it recovered part of its initial sell-off on Thursday.
Banks and defensive sectors including consumer staples and healthcare stocks that tend to be less sensitive to the economic climate boosted the benchmark index.
Banks gained 2.7%, recouping their previous session’s losses, while pharmaceutical giants like AstraZeneca and GlaxoSmithKline rose nearly 1.5% each.
“Healthcare is seen as a more defensive sector, certainly with the ongoing pandemic. The demand for healthcare isn’t going to go away, so you’re seeing resilience there,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.
The commodity-heavy FTSE 100 index has fallen nearly 0.7% this week, trailing behind its pan-European peers, as weaker commodity prices hit oil and mining stocks amid recession fears and demand concerns.
Ongoing tensions between the UK and the European Union (EU) over post-Brexit trade rules for Northern Ireland also added to investor woes.
“There is concern that if there isn’t some kind of deal reached, there could be a fresh trade spat emerging between the EU and the UK that could lead to a further increase in prices,” said Streeter.
“That would be extremely worrying for the UK economy at a time when it’s already grappling with expectations of 10% inflation.”
The domestically focussed mid-cap index advanced 1.5%.
Sage Group rose 1.7%, after the software company’s first-half profit met market estimates and said its margin was expected to trend higher in the second half and beyond.
(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Sherry Jacob-Phillips and Rashmi Aich)