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London stocks post first weekly decline of the year

January 22, 2023 00:00:00

The UK's main stock indexes rose on Friday but marked their first weekly losses of the year on growing worries about a recession and major central banks staying the course despite signs of a moderation in inflation, reports Reuters.

The FTSE 100 closed 0.3 per cent higher, while the more domestically-focussed FTSE 250 midcaps added 0.7 per cent.

But the gains were not enough to reverse losses recorded during the week as weak US economic data and hawkish comments from central bankers offset optimism about China's reopening from COVID-19 lockdowns.

The FTSE 100 ended the week 0.9 per cent lower, while the midcap index lost 1.3 per cent.

Inflation-pinched British consumers cut their shopping by the most in the key month of December in at least 25 years, official data showed, dashing hopes for a Christmas boost for the country's flagging retail sector.

"It is hard to put yourself into the psychology of a retail sector investor sometimes," said Sanjiv Tumkur, head of equity research at Rathbone Investment Management in London.

"Maybe they are saying the retail sales data wasn't great but it could have been a lot worse and as long as the retail sales aren't falling off a cliff, then there is value in some of these retailers."

The UK retail index rose 1.1 per cent, taking its year-to-date gains to 14.2 per cent after a torrid 2022.

Online fashion retailers Asos and Boohoo jumped 11.1 per cent and 8.5 per cent, respectively, after BofA Global Research said it was a buyer of the stocks, and noting the sector is trading at "undemanding" valuations.

Market participants are leaning towards a 50 basis point rate hike by the Bank of England next month, which would be its tenth straight hike.

Although British headline inflation has fallen from a peak of 11.1 per cent in October, it was still running at 10.5 per cent in December, data earlier this week showed.

Meanwhile, shares of SSE Plc (SSE.L) climbed 2.9 per cent after the power firm raised its annual earnings forecast, helped by strong market conditions and persistently high energy prices.

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