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Markets remain wobbly as inflation woes bite

by LLB Reporter
17th Jun 22 11:25 am

The sun is shining bright, the weekend is here, yet all investors can think about is medicine to calm the motion sickness after one of the most chaotic five days for stocks and shares in a long time.

Rising inflation, rising interest rates and a rising chance of a recession have all served to turn stomachs in equity-land. While parts of Europe managed to regain focus on Friday, with a 0.3% gain from Germany’s Dax index, and pre-market indicative prices pointed to a slightly better session in the US, the FTSE 100 was still feeling groggy.

“Dipping slightly on Friday at the market open and then trying to get back on its feet, the FTSE 100 is on track to end the week nearly 4% lower. The S&P and Nasdaq in the US are looking at circa 6% losses for the five-day session,” says Russ Mould, investment director at AJ Bell.

“Year-to-date that means the FTSE 100 has fallen approximately 6%, the S&P down 24%, and the Nasdaq 33% lower. This is a shock to the system for many investors who are relatively new to the game and haven’t seen a proper market correction before.

“Media group Future pleasantly surprised the market by saying everything was going well with trading, triggering a big jump in the share price. The stock had previously been weak as investors feared its business model – making commission from product sales that originated from its online content – would suffer if consumers were cutting back on spending.

“Investor confidence can’t have been completely shattered, however, judging by the fact some people were happy to go shopping for bargains after the recent sell-off. ASOS bounced back nearly 5% after yesterday’s slump, while Boohoo also moved 2.6% higher.

“These buyers must clearly be taking the view that the shares have been oversold and the new chief executive of ASOS has done the classic kitchen sink job – dishing out all the bad news and resetting expectations so the story turns to recovery from day one of their tenure.”

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