FTSE 100 hits record high

The FTSE 100 has pushed sharply higher as a fresh bout of weak economic data poured cold water on the notion that the Bank of England would have to take a patient approach in the face of burgeoning inflation pressures. Notably, the gains seen in the wake of a 0.3% decline in retail sales volume continues to maintain the ‘bad news is good news’ mantra for markets. However, it is notable that the pattern of UK consumers having to pay ever increasing amounts of money for less end product ultimately appears to have normalised. Meanwhile, the ongoing weakness of the pound provides an additional tailwind for international focused UK listings, as sterling heads lower against all major currencies this morning.

A raft of better-than-expected Chinese data has helped lift stocks in the region, with GDP rising by 5.4% compared with the year earlier. This highlights the likely positive impact of the strategic measures undertaken by the government and PBoC, with improvements across industrial production and retail sales bringing hope that both the manufacturing sector and domestic consumption are heading in the right direction. Nonetheless, today’s optimism has been somewhat muted given the proximity to a potential early tariff announcement from Trump following Monday’s inauguration.

The combination of easing inflation expectations and a bumper set of initial earnings releases out of the US has helped drive markets higher this week, with traders now turning to look for fresh signals from Trump as he enters the White House. Big banks have historically done very well under Trump, and we are seeing plenty of grounds for optimism that his second term will be similarly positive for the sector. High margins, a strong economy, high post-election trading volumes, and improved sentiment around dealmaking provides a heady cocktail that has allowed the likes of JP Morgan, Goldman Sachs, Citigroup, Morgan Stanley, and Wells Fargo to rise between 4% and 8% over the course of the week. Next week brings the likes of Netflix, Procter & Gamble, American Express, and Johnson & Johnson.