Market snapshot: jobs, growth stocks and Ukraine

Wall Street closed last night at its highest level in six weeks, but London is lower Friday. Our head of markets runs through the key issues affecting stock prices at the end of the week.

The increasingly polarised market directions on both sides of the pond were again highlighted as investors took differing views on their domestic economic strength.

For US investors, the report of jobless claims falling to their lowest level since 1969 underlined a recovering economy which, it is hoped, can navigate the headwinds of rising interest rates and persistent inflation.

As such, there was some brisk buying of those stocks which would continue to benefit from a rebounding economy, with growth stocks and big tech in particular in focus. Chipmakers and the largest tech names continued to claw back some of the year’s losses which were set in train by a market rotation even before the geopolitical crisis had begun.

The recent whipsawing within the market does, nonetheless, highlight the fragility of sentiment and despite some decent gains of late, the main indices remain behind, with the Dow Jones down by 4.5% in the year to date, the S&P500 by 5.2% and the Nasdaq by 9.3%.

Uncertainty also remains around the current conflict, with the meeting of Western leaders in Brussels providing further focus on next steps. These could include further military aid to Ukraine and additional sanctions on Russia, the latter of which has put further upward pressure on prices ranging from metals to energy and food. The oil price dipped temporarily on the possibility of more supply, but remains ahead by 52% in the year to date as the demand supply imbalance remains in plain sight.

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Asian markets were less sanguine than their US counterparts, as the initial euphoria arising from the promise of monetary stimulus last week began to wane in the absence of any further detail. With clouded visibility on a Chinese economy which could yet flatline in the first quarter and with the overhang of regulatory threat to technology companies still strongly in the mix, these markets are also flitting between hope and caution.

For the UK, a reported dip in consumer confidence will come as little surprise. The increase in the cost of living may have been partially mitigated in the Spring statement, but on balance the UK consumer remains extremely cautious. UK retail sales also dipped slightly in February, mainly driven by a decline in online sales as people ventured outside for travel, work and social purposes following the full lifting of restrictions.

From a market perspective, the temporary resurgence of optimism for the economy as evidenced in the US is not washing onto UK shores. The initial market opening has taken the less positive lead of Asia, dipping after a recent run which has seen the FTSE100 maintain its foray into positive territory for the year.

Even so, the premier index by definition has a large exposure to overseas earnings and the US in particular, so is well placed to at least partially benefit from any strength there from the companies on the ground. Meanwhile, the interest in the FTSE100 as an investment destination has been rising steadily of late, pushing the index to relative outperformance, and ahead by 1% in the year to date.

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