FTSE 100 ends 2022 with small gains, outpacing US and European peers

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Britain’s major stock indices ended Friday’s shortened trading session lower, but the commodity-heavy FTSE 100 outperformed many of its global peers in 2022, in a year that has seen markets shaken by the war in Ukraine, inflation and fears of recession.

The FTSE 100 slid 0.8%, with losses of between 1% and 2.7% in consumer staples, energy and industrials weighing on the index.

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« Although UK markets have been luckier than their peers, despite the economic and political upheaval, the overall market mood is expected to remain gloomy, » said Kunal Sawhney, CEO of equity research firm Kalkine Group.

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“With COVID-19 still knocking on doors, the upside may be short-lived,”

The British benchmark index ended the year up slightly, in contrast to the sharp decline in the US and European markets.

« The FTSE 100 is more of an outward-looking global index that does not reflect the fundamentals of the UK economy, » said Victoria Scholar, chief investment officer at Interactive Investor, in a note.

Scholar said the index has benefited from energy and mining stocks this year. The sectors gained 41.8% and 23% respectively for the year.

Britain’s more domestically oriented mid-cap index closed the last trading session down 0.8%, falling 19.7% this year, its worst performance since 2008.

“The FTSE 250 is more closely correlated to the UK economy and has been weighed down by economic and political uncertainty this year,” Scholar said.

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In 2022, UK markets faced the country’s tumultuous change in political direction, a cost of living crisis and a hawkish central bank, with traders now fearing the economy could tip into a recession next year. next.

Adding to the pessimistic note, annual growth in UK house prices slowed to 2.8% in December from 4.4% the previous month, according to mortgage lender Nationwide. The home construction sector fell 2.3%.

The Bank of England is expected to raise interest rates by 25 basis points in February.

(Reporting by Johann M Cherian and Shristi Achar A in Bengaluru; Editing by Eileen Soreng, Devika Syamnath and Alison Williams)