The FTSE 100 extended its recent strong run and is now not too far off the levels it reached before the Russian invasion of Ukraine and only marginally lower year-to-date,” says AJ Bell investment director Russ Mould.
This doesn’t mean investors have shrugged off the first major war in mainland Europe in a generation but it reflects an index which is relatively well positioned against the current backdrop.
It has substantial commodities exposure, a decent yield which appeals in an inflationary environment and more discounted valuations than seen in other global markets.
“By contrast the US S&P 500 and Germany’s DAX index, despite both eking out recoveries in the last week or two, are down 7% and more than 10% respectively since the start of 2022,” said AJ Bell’s Russ Mould.
“Shares in Nike found some air in afterhours trading overnight after a solid set of third quarter numbers. Impressively the sportswear giant managed to boost margins despite the supply chain issues it continues to face.
“While it is frustrating the company is not able to fully service its markets, having customer demand which outpaces supply is testament to the strength of its brand.
“Encouragingly Nike continues to step up its direct to consumer sales, a central part of its strategy. Nike’s exposure to Russia is not explicitly broken out but, in the wake of the company suspending sales to the country, is not thought to be too material.
“China on the other hand is a different story, Nike already faced a battle to rebuild sales in this key market after it was boycotted for raising concerns about forced-labour allegations involving Uighur Muslims in the Xinjiang region.
“If the relationship between the West and China were to deteriorate further, due to the latter’s support for Russia, it could turn into a larger problem for the business.
“In the UK bank shares were higher after comments from the US Federal Reserve Jerome Powell last night which suggested there would be little let up in the pace of interest rate rises – a positive signal for the sector’s profitability.
“Computer services and support outfit Softcat jumped higher as the continuing digitisation theme supported a hike in full year guidance.
“B&Q-owner Kingfisher was modestly higher on a very strong set of full-year results. Kingfisher benefited from people looking to do up their homes during the pandemic, however the world has since moved on and, despite management reporting a strong start to the current year, there has to be a risk that the company’s moment in the sun has passed.”