The equity markets are storytellers of the nature of investor confidence in the market and a reflection of the larger economy at large. But sometimes, they tend to tell a story, different from the existing realities. One good example of the same, is the intensity with which the markets rallied during the pandemic, when existence as usual for most on the planet came to a grinding halt.
FTSE Breaks Records
In a story, that may have some similarities, yesterday (22 April) London's marquee index FTSE 100 reached its record high. FTSE closed on 8,023.87 points. The index made a gain of 1.62 per cent in the day. The FTSE has some of the country's (UK) biggest corporations. FTSE which ended 19 April on 7,834.52, has seen a significant growth in just a few days.
In all, just in the past 6 months, the index has surged over 8 per cent.
All this comes at a time, when the United Kingdom's economy is not exactly in the pink of its health. In fact it was just in January, that it was revealed, that British economy had entered into recession in the last few months of 2023. Nevertheless, according to a recent data, the country did however witness an easing of its inflation rate.
The UK's service driven economy, a lot like its European (Not EU) counterparts, has seen a slowdown. Consumer confidence in the country is low, this is crucial, as, for a consumer spending-driven economy, like that of UK, it comes with major consequences.
According to a recent data, the country did however witness an easing of its inflation rate. | PIC: AFP
Global Factors at Play
This surge in its prospects could also be sign of the global alleviation of concerns surrounding supply chain and crude oil prices in the market. Last week saw an escalation in tensions between Iran and Israel. Many even suspected a full blown conflict. This would have impacted the markets. The worries even manifested on to the equity markets, as indices drowned in the sea of red.
However, after relatively innocuous and strategic military exchange, its appears, that room for further escalation has been neutralized for now.
FTSE which ended 19 April on 7,834.52, has seen a significant growth in just a few days. | PIC: AFP
This news percolated into the arena of equity markets as well. This, as major indices throughout the globe, have traded in green. May it been Asian indices, including Nikkei, Hang Seng and Sensex, along with Nifty or even the American indices (Nasdaq and Dow Jones) have progressed stably in the past few days.
This, perhaps also explains the status of FTSE's spurt. United Kingdom is looking at a general election, that could have major consequences locally and globally. The incumbent Conservative government under PM Rishi Sunak, is widely expected to be defeated by Keir Starmer-led Labour.
