by On Friday, stocks in the United Kingdom came under pressure after data revealed that factory activity had slowed down further in June because of the inflationary pressures. This underlined the possibility of a sharp slowdown that could trigger an economic recession in Britain.
Indexes under strain
Throughout the session, the FTSE 100 index continued to flirt between gains and losses and the blue-chip index eventually ended the day flat. As for the FTSE 250 index, the domestically focused mid-cap ended the day lower by 0.16%.
Hence, both indexes in the United Kingdom had started the second half of the year on a muted note. The first half of the year had already been a rough one for the indexes over worries that the rapid increase in interest rates for curbing inflation would result in an economic recession.
Market analysts said that there were not many signs of the concerns rattling the financial markets are going to subside anytime soon. Investors are worried about the looming signs of recession, as inflation continues to remain high.
Economic data
The purchasing managers’ index (PMI) of UK manufacturing by S&P Global had been 54.6 in May, but it declined to 52.6. This was after a downward revision from a preliminary reading that had put it at 53.4 for the month of June.
Meanwhile, data from the Bank of England (BoE) showed that consumers in Britain had become cautious of their Britain in light of the rising prices in the country. Moreover, the increasing fears about the impact on the UK economy of the higher cost of borrowing have driven traders to pull back their expectations of interest rate hikes by the Bank of England this year.
Since December, the Bank of England (BoE) has hiked up the interest rate five times and the next scheduled meeting of the British central bank will happen in August.
Stock performances
The FTSE 100 was under pressure on Friday and the biggest drag on the index was mining stocks which fell by 3.2%. However, a rise in utilities and consumer staples stocks managed to counter the losses to flatten the index once more.
There was a 0.6% decline in Shell, as the oil firm decided to suspend its plans related to sales in Nigeria of its onshore oil assets. It was also after the news that Russia was setting up a new company in order to take control of the Sakhalin-2 gas and oil project.
Of the total stake in the Sakhalin Energy Investment Co., two trading companies in Japan and Shell have ownership of less than 50%. There was also a decline in Abrdn and Jupiter Fund Management of 3.3% and 4.2%, respectively. The fall occurred after the companies saw their stock rating downgraded by Citigroup from ‘neutral’ to ‘sell’.
The political turmoil in the United Kingdom also contributed to the strain on the UK economy, as there could be trading trouble with the European Union because of the conflict on the Northern Ireland protocol.
