MARKET REPORT: Footsie falters amid fresh fears for the global economy

After a strong start to the year, hopes the FTSE 100 could hit a record high this week have cooled amid fresh worries the global economy is heading for a slowdown in 2023.

The UK’s premier index flew out of the blocks in early January, rising by more than 5 per cent and putting it within touching distance of a record closing high of 7877.45.

But after a string of weak data releases from the US and cautious comments from Federal Reserve officials, the FTSE 100 fell 1.1 per cent, or 83.41 points, to 7747.29.

After a string of weak data releases from the US and cautious comments from Federal Reserve officials, the FTSE 100 fell 1%, or 75.31 points, to 7755.31

The sell-off spread across Europe, with stock markets in Frankfurt, Paris and Milan all down by more than 1 per cent.

In London investors flocked towards defensive stocks and Diageo gained 0.7 per cent, or 24.5p, to 3692p, British American Tobacco rose 1.2 per cent, or 37.5p, to 3108p and Imperial Brands climbed 1.2 per cent, or 24p, to 2051p.

Recessionary fears saw metals on the London Metal Exchange take a tumble with copper falling by over 1 per cent. As a result heavyweight miners all sold off. 

Fresnillo, was down 2.5 per cent, or 23.2p, to 918.6p, Antofagasta, down 4.3 per cent, or 76.5p, to 1723p and Glencore, down 2.2 per cent, or 12.5p, to 564.1p.

At the same time BP slid 2.4 per cent, or 11.5p, to 474.7p and Shell gave up 1.8 per cent, or 43p, to 2360.5p.

Banks were also struggling after analysts warned loans could turn sour in a downturn.

Barclays was down 2.6 per cent, or 4.72p, to 177.38p and Lloyds fell 1.3 per cent, or 0.66p, to 48.81p.

Stock Watch – Fevertree

Tonic maker Fevertree was given a much needed boost after Berenberg upped the price target on the stock.

Shares had been floundering and this week fund manager Nick Train said it as his biggest embarrassment last year after it fell 60 per cent in 2022.

He added: ‘I thought I was so clever when I began to accumulate that position in early 2020. But it has carried on falling.’

Berenberg believes it can bounce back this year. 

Shares rose 3.5 per cent, or 36p, to 1078p.

Private equity firms lost ground amid fears that the current high interest rate environment could eat away at their returns.

3i, which owns retailer Action, fell 1.1 per cent, or 15.5p, to 1415.5p and Bridgepoint, which is looking to buy a stake in the Hundred cricket competition, was down 7.1 per cent, or 16.6p, to 218.2p.

There was little for investors to cheer on the corporate news front either. AJ Bell slumped after the firm told investors there was less cash flowing into the trading platform.

Chief executive Michael Summersgill blamed the cost of living crisis. It boomed during the pandemic as young men flush with cash were stuck at home looking for something to do. 

They decided to take a punt on the markets. AJ Bell fell 7.9 per cent, or 29.4p, to 340.8p

Harbour Energy slid, with the oil and gas producer set to pay a higher North Sea windfall tax in the UK than initially expected.

The company previously pencilled in a £485million charge for 2022 but that will now ‘be materially higher. It comes as the firm plans to cut jobs as it scales back investment in response to the tax.

The levy increased the effective tax rate in the North Sea from 40 per cent to 65 per cent initially and was increased again to 75 per cent from the start of this year as the Government sought to bring in extra income. Shares fell 3.2 per cent, or 10.2p, to 312.6p.

Hotel Chocolat chief executive Angus Thirwell told investors that it was ‘recession resistant’ following a strong Christmas.

‘Families are looking for uplifting things in a tough environment, things that make you feel good,’ said Thirlwell, who owns 27 per cent.

‘Chocolate is the number one legal thing that can do that.’ It rose 12.4 per cent, or 23p, to 208.5p.

Auto Trader was speeding ahead after Goldman Sachs, a fan of the online classifieds business, slapped a buy rating on the stock. It added 1 per cent, or 5.8p, to 572.6p.

And Aston Martin announced 100 new technician jobs, ahead of launching new models this year, will be created at its headquarters in, Warwickshire. But shares fell 3.6 per cent, or 6.05p, to 162.85p.

Informa reported a strong finish to 2022. Its shares rose 0.1 per cent, or 0.4p, to 660.4p.