FTSE 100 finishes week higher as Wall Street jumps

FTSE NEW YORK, NEW YORK - JANUARY 04: Traders work on the floor of the New York Stock Exchange during morning trading on January 04, 2023 in New York City. U.S. stocks rose at the start of the second day of trading in 2023. The stock market opened awaiting an economic data report on the U.S. economy amid the Federal Reserve’s rate hikes to attempt to lower inflation. (Photo by Michael M. Santiago/Getty Images)
The FTSE 100 continued a strong start to the year while Wall Street rallied on Friday. Photo: Michael M Santiago/Getty

The FTSE 100 managed to extend gains to a fourth straight session and kept the new year rally going, while European stocks bounced back on Friday.

The FTSE 100 (^FTSE) climbed 0.87% to close at 7,699, while the CAC 40 (^FCHI) in Paris rose 1.40% at 6,855 points. In Germany, the DAX (^GDAXI) advanced 1.13% to 14,598.

The UK's blue-chip index hit a nine-month high, boosted by Shell (SHEL.L) and other commodity-linked stocks.

Shell jumped 1.75% after it said earnings from its liquefied natural gas trading operations are likely to have been significantly higher in the fourth quarter of last year.

Miners took the lead, with precious and base metal miners rising more than 1% each as the related commodity prices rose. Anglo American (AAL.L) rose 5.39%, Endeavour Mining (EDV.L) climbed 4.25% and Rio Tinto (RIO.L) was up by 1.84%.

Richard Hunter, head of markets at Interactive Investor, said the fall in sterling (GBPUSD=X) has also helped the index.

“The FTSE 100, meanwhile, has been helped along by some sterling weakness which translates into higher overseas earnings values for many of its constituent companies, and has added 2.7% so far this week," he said.

Read more: FTSE bosses make the average UK yearly salary in 5 days

“In early exchanges, the medium term hopes for a Chinese recovery were again in evidence, as the miners edged towards the top of the leader board, with the likes of Rolls-Royce (RR.L) and Prudential (PRU.L) also in pursuit."

The pound has fallen to its lowest level since mid-November as investors braced for US jobs data that will help chart the path forward for Federal Reserve monetary tightening.

Across the pond, stocks were higher as strong US jobs data accompanied with below forecast average earnings numbers calmed worried over the Federal Reserve's rate-hike trajectory.

The Dow Jones (^DJI) rose 1.63% to 33,459 points. The S&P 500 (^GSPC) advanced 1.65% to 3,871 points and the tech-heavy NASDAQ (^IXIC) gained 1.51% to 10,304.

Mike Bell, global market strategist at JP Morgan Asset Management, said: "Solid job gains but with signs that wage gains are moderating. The ideal scenario for 2023 is that wage growth and inflation moderate without a rise in the unemployment rate and this report suggests that outcome is not impossible.

“Our base case though remains that unemployment will have to rise to get wage growth and inflation back down to the Fed’s target. We think though that equities have already priced in a lot of bad economic news for 2023, so even a recession wouldn’t necessarily take stocks materially lower than their 2022 lows. If wage growth does come down this year without the need for a rise in the unemployment rate, stocks markets would likely cheer that outcome.”

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In Europe, inflation across the eurozone fell last month, and faster than expected, as energy prices fell back.

Consumer prices across the euro area rose by 9.2% in the year to December, down from the 10.1% recorded in November.

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The drop was driven by lower energy prices ⁠— annual energy price inflation slowed to 25.7%, compared with 34.9% in November.

Read more: Drivers paying more as supermarkets resist lowering petrol prices further

Meanwhile, Brent crude (BZ=F) was trading at around $79 per barrel, as oil prices rose on China reopening, but are still heading for a weekly loss.

In Asia, Tokyo’s Nikkei 225 (^N225) gained 0.59% to close at 25,973 while the Hang Seng (^HSI) in Hong Kong tumbled 0.29% to 20,991. The Shanghai Composite (000001.SS) finished flat at 3,157 points.

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