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Global markets bounce back

by LLB Reporter
23rd May 22 11:51 am

The FTSE 100 is now within a whisker of its January 2022 starting position, meaning that anyone who owns a fund tracking this index will be smiling given how the performance is better than most other major stock markets in the world.

Russ Mould, investment director at AJ Bell, said: “Commodity producers have been the FTSE’s saviour and they are once again driving the index at the start of the new trading week. The top five risers in terms of index points were Shell, BP, Rio Tinto, Glencore and Anglo American, implying that investors are regaining confidence about commodities demand and being less pessimistic about global economic growth.

“Investors have endured very difficult conditions this year. Persistent rising inflation, higher interest rates, war and now recession fears; it’s no wonder that sentiment has been very weak.

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“Last week’s shock from US consumer-facing companies regarding the outlook for consumer spending shows the market is increasingly pricing in the prospects of recession. Therefore, it is difficult to suggest today’s market rally is the start of the big comeback for equities.

“The consumer spending shock is still unfolding, and we could see more pain for corporates and individuals in the coming months. Markets always price in what they think could happen, but it feels like there could be more gloom ahead. Corporate profit margins are being squeezed and that could lead to reduced business investment which in turn could hurt the economy.”

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