Thursday, September 21

Commodity-linked shares lift FTSE to the third week of gains

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Britain’s FTSE 100 ended higher on Friday and marked their third straight weekly gain on strength in commodity-linked shares and consumer staples, although worries about high inflation slowing economic growth kept sentiment in check.

After falling as much as 0.35%, the blue-chip FTSE 100 rose 0.2%, led by energy stocks and large dollar earning companies, including spirits maker Diageo and British American Tobacco.

The mood took a hit as data showed Britons cut back on their shopping in February and consumer confidence levels tumbled this month, while accelerating inflation cast a shadow over the world’s fifth-biggest economy.

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“Inflation is really becoming more sticky, and the war in Ukraine and the turmoil in commodity markets are adding fuel to the fire,” said Peter Garnry, head of equity strategy at Saxo Bank.

“The rise in commodity prices is a cause of concern because they can impact operating margin for companies.”

While the commodity-heavy FTSE 100 has been buoyed by surging oil prices this week, mid-cap stocks snapped its two-week winning streak amid concerns about a dent to economic growth.

Oil majors Shell and BP rose 1.4% and 0.6% respectively, as crude prices gained following reports of a missile strike and a fire at Saudi Arabia’s state-run oil company Aramco’s facility.

The domestically focussed midcap index rose 0.3%, with real estate stocks leading gains.

Discount retailer B&M European Value Retail fell nearly 3.6% after Credit Suisse downgraded the stock to “neutral,” while the overall retail index edged 0.2% higher.

Industrial technology group Smiths Group slipped 2.7% despite reporting higher half-year earnings.

Petropavlovsk slumped 16.1% after the London-listed gold miner said it would miss an interest payment due on Friday after Britain froze the assets of its main lender Gazprombank. (Reporting by Sruthi Shankar in Bengaluru and Amal S; Editing by Subhranshu Sahu and Richard Chang )