The UK’s benchmark index, the FTSE 100, concluded the week with a minor decline, predominantly affected by decreases in aerospace and defense sectors.
In contrast, the British pound experienced its most successful week since November, boosted by indications from the U.S. that the Federal Reserve might consider lowering interest rates soon.
This shift was prompted by softer U.S. economic data, suggesting a possible change in monetary policy direction.
The FTSE 100, known for its international focus, dropped by 0.4% on the closing day, marking its third consecutive week of declines.
This performance was notably weaker compared to its European and U.S. counterparts, which reached new heights, especially due to gains in technology stocks.
Meanwhile, the midcap FTSE 250 index saw an uplift, gaining 1.3% over the week, supported by an annual budget statement that met market expectations.
On the day, it marginally rose by 0.1%.
Significant movements were seen in the currency market where the pound appreciated by 0.18% to $1.2826.
This uptick came after the currency reached its highest level since August against a softening dollar, influenced by U.S. labor data revealing accelerated job growth in February, albeit with an increase in the unemployment rate and a deceleration in wage growth.
Charles Hepworth of GAM Investments highlighted the implications of these trends for potential rate cuts, stating, “If we are genuinely seeing the unemployment rate having troughed and moving higher and wage growth slowing, then it obviously pushes the door for rate cuts open wider.”
Sector-wise, aerospace and defense stocks experienced a 1.1% decrease, ending a seven-day winning streak, primarily due to Melrose Industries’ warning about persistent supply chain issues.
On a brighter note, real estate investment trusts and real estate sectors saw increases of 1.4% and 1.3%, respectively, which helped mitigate the overall losses on the FTSE 100.
Prominent movements in individual stocks included DS Smith, which surged 5.2% after Mondi announced a principle agreement for an all-share acquisition valued at £5.14 billion ($6.57 billion), leading to a 2.3% decline in Mondi’s shares.
Informa also saw a slight rise of 0.3% after uplifting its earnings forecast for the year and reporting positive 2023 profit figures.
Conversely, Entain’s shares fell by 5.4%, continuing its downward trend following the announcement that regulatory changes could adversely affect its 2024 profits.