The FTSE 100 is heading into Easter with a spring in its step despite weaker than expected data from the US.
Figures on job openings and factory orders are pointing towards a potential recession for the world’s largest economy, but the upside might be a pause in interest rates which would typically be a positive for stocks.
AJ Bell head of financial analysis Danni Hewson said: “The concern is the Federal Reserve might have to sound the retreat before its war on inflation is truly done. This could leave us with the worst of all worlds – the dreaded stagflation where the economy is shrinking but prices are continuing to surge higher.
“Insurer Direct Line bounced back on Wednesday as Citi moved its rating from ‘sell’ to ‘buy’ on the shares – the implication being that the shares have bottomed out after a torrid period marred by a cancelled dividend amid claims of inflation and bad weather.
“The shares remain down more than 30% on the level at which they started the year and it could take some time for investors who had got used to a steady stream of income from the stock to be won over.”