Although many developed markets fell over the month following disappointing US inflation data, the FTSE 100 Index reached a new all-time high, driven up by sterling’s weakness against the US dollar, signs of a shift away from the technology sector, and encouraging corporate earnings data.
- Bid activity provided a boost
- Inflationary pressures continued to moderate
- The labour market showed signs of weakening
UK equity markets buck the global trend: although many developed markets fell over the month following disappointing US inflation data, the FTSE 100 Index reached a new all-time high , driven up by sterling’s weakness against the US dollar, signs of a shift away from the technology sector, and encouraging corporate earnings data .
“The annualised rate of consumer price inflation reached its lowest level since September 2021”
A flurry of bid activity: the FTSE also received a boost from takeover activity in the mining sector as BHP launched a bid – subsequently rejected – for Anglo American . Takeover activity also featured in the FTSE 250 Index as US private equity company Thoma Bravo agreed a bid with UK cybersecurity firm Darktrace . Over April as a whole, the FTSE 100 Index rose by 2.4%; in comparison, the more domestically sensitive FTSE 250 Index rose by 0.4%.
Inflation continues to fall: the UK economy expanded by 0.1% during February, and the Office for National Statistics (ONS) revised up its January growth figure from 0.2% to 0.3%, raising hopes that the country has moved out of recession. The annualised rate of consumer price inflation reached its lowest level since September 2021, falling from 3.4% to 3.2% in March. Elsewhere, the UK labour market showed signs of weakening: the rate of unemployment rose to 4.2% over the three months to February, and the proportion of economically inactive people climbed to 22.2%. Average growth in real wages rose by 1.6% over the period, reaching its highest level since the July-September quarter of 2021.
“Healthy, but unexciting”: dividend payouts from listed UK companies rose at a headline 4.9% to £15.6 billion during the first three months of 2024, according to Computershare’s Dividend Monitor . However, underlying growth was a “healthy, but unexciting” 2%. Looking ahead, Computershare raised its forecast for headline growth over 2024 from 3.7% to 4.3%, based on expectations of an increase in special dividends, whereas underlying full-year growth is set to be more muted at 1.5%.
Profit warnings on the rise: over the 12 months to the end of March, 18.7% of UK listed companies warned on profits, according to a study published by EY Parthenon , representing a new post-pandemic high. EY Parthenon also reported an increase in companies highlighting accounting and operational issues as a trigger for a profit warning, alongside a rise in financial services companies citing regulatory action.
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