Market snapshot: UK stocks flying the flag

The initial shock of a hot wholesale inflation release was soon swept aside as the main indices recovered to finish all but unchanged.

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Wholesale prices showed a rise of 0.9% on the month compared to estimates of 0.2%, and annualised at 3.3% versus a 2.5% expectation. As a potential harbinger for consumer prices, the reaction to the report was negative, despite an actual consumer inflation print earlier in the week which raised few concerns. However, investors chose to maintain their stance that a 0.25% interest rate cut remains firmly on the table for September, although the news did totally price out any hopes for a more aggressive 0.5% reduction as some had hoped.

The central theme of the US consumer will come under the spotlight today with the release of retail sales figures, where further detail will be sought as to sentiment among this key driver of growth. Tariff impacts and a slightly weakening jobs market are feared to have brought purchases forward in previous month, leaving this release vulnerable to disappointment. Elsewhere, the much vaunted meeting between President Donald Trump and Vladimir Putin will take place today, although expectations are low for an immediate ceasefire in the Russia/Ukraine conflict which could impact both the euro and US dollar.

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In the meantime, albeit by the slimmest of margins, the S&P eked out a gain to set a fresh record closing high to stand ahead by 10% in the year to date, with gains of 5.6% and 12.4% currently in play for the Dow Jones and Nasdaq respectively.

Asian markets also shook off their initial concerns to stand higher, although these had been prompted by other factors. In Japan, the Nikkei 225 recovered from its sharp sell-off the previous day as annualised GDP growth of 1% beat expectations, although much of this could have been the result of purchases being brought forward ahead of tariff deadlines.

Despite the new extension to its own tariff agreement with the US, China is struggling to find its economic feet as higher levies loom. Even prior to “Liberation Day”, the economy had been battling subdued consumer demand, high youth unemployment and a beleaguered property sector which undermined any recovery. Weak releases on retail sales and industrial production confirmed an economy which is faltering, although more optimistic investors driving the main indices slightly higher on hopes that the numbers could prompt renewed stimulus from the authorities.

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Largely insulated from the tariff concerns, UK markets resumed their onward march in opening trade, with the premier index posting further gains after setting yet another new record closing high on Thursday. Strength in the mining sector typified the ongoing risk-on approach in a broad mark-up of prices, with little more than a blot in the landscape coming from marginal weakness in Standard Chartered (LSE:STAN) and HSBC Holdings (LSE:HSBA) after the Chinese economic updates.

Selective buying among the housebuilders and some strength in the oil majors despite a drop in the underlying commodity also helped to fuel gains, leading to the FTSE 100 now being ahead by 12.6% so far this year, quite apart from an average dividend yield of 3.3% across its constituents which further bolsters total returns. Meanwhile, the FTSE 250 is also contributing to flying the UK investment flag, with its own gain now reaching 6% for the year.