Markets displayed resilience in the face of events in the Middle East, with the FTSE 100 ticking higher on Friday.
This comes after mixed trading in Asia and with futures pointing to small gains on Wall Street later. Concern about inflation remains elevated with oil prices on course for their largest weekly gains since Russia’s invasion of Ukraine in 2022.
The US decision to give Indian refiners a 30-day waiver allowing them to buy Russian oil suggests any solution to the blockage of the Strait of Hormuz is unlikely to happen overnight. The longer that key energy infrastructure and shipping routes in the region are affected, the greater the chance of a significant inflationary impact.
This in turn could translate into higher interest rates over the medium term – which is typically bad news for equity markets.
Still, some investors were willing to bet that the selling in certain sectors earlier this week was overdone as airline stocks regained some altitude. On the flipside, more defensive stocks were out of favour.
Whether that pattern holds next week looks set to depend on events thousands of miles away. More immediate is another significant item to digest as US jobs numbers are published later today. A stronger-than-expected number might solidify the idea that the Federal Reserve will avoid rate cuts for the foreseeable future as they factor in the recent surge in energy markets.
IMI
If there’s one area where the UK market has a surfeit of high-class operators it is complex engineering and one of these names, IMI, topped the list of FTSE 100 gainers thanks to its latest results.
The company makes valves, actuators, and control systems for the control of steam and fluids and serves a variety of sectors including healthcare, energy and climate control.
A 5% increase in organic revenue translating into an 8% increase in operating profit tells a story of improved profitability and there was an impressive uplift in cash generation.
Management demonstrated their confidence in what looks to be a solid outlook, with a generous buyback announced alongside a meaningful increase in the dividend.
Russ Mould: Investment Director
Russ Mould is AJ Bell's Investment Director. He has a Master's degree in Modern History from the University of Oxford and more than 30 years' experience of the capital markets.
He started out at Scottish...
