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FTSE stays near 2-year highs after UK, US data

The FTSE index was resilient today and was trying to stay positive on the day, despite losses elsewhere.

On Friday, the FTSE index remained flat despite losses in other stock markets as bulls got some serious support from today’s UK econ numbers.

UK data cheered by economists

Earlier in the day, investors paid attention to the UK GDP figures for November. According to the Office for National Statistics, the British economy recovered to above pre-pandemic levels in November.

GDP grew 0.9%, up from 0.2% in October and above expectations for 0.4% growth. That left the economy 0.7% above its level in February 2020, just before the first wave of the pandemic hit.

ONS chief economist Grant Fitzner said that the economy grew strongly in the month before Omicron struck with architects, retailers, couriers, and accountants having a bumper month. Construction also recovered from several weak months, as many raw materials became easier to get hold of.

“This meant that monthly GDP exceeded its pre-pandemic level for the first time in November,” he added.

Additionally, UK industrial production improved notably to 1% month-on-month in November, up from -0.5% in October. At the same time, manufacturing production also rose markedly to 1.1% (from 0.1% previously).

The FTSE index shot higher after the numbers but was dragged down shortly after amid the negative sentiment in US stocks.

Terrible US data

The focus then switched to US retail sales for December, which printed a -1.3% monthly decline, the most significant drop since February 2021.

Furthermore, retail sales ex-autos and gas plunged even more to -2.5% monthly. Worse still, the control group retail sales – used in the GDP calculations – crashed 3.1% month-on-month – massively below forecasts.

From other news, US capacity utilization ticked lower to 76.5% in December, against expectations of an improvement to 77% (from 76.6% in November). At the same time, industrial production fell to -0.1%, down from 0.7% previously.

Later in the session, the Michigan consumer sentiment survey for January is expected to ease slightly from 70.6 to 70.0. However, sentiment among consumers will likely continue to decline amid the soaring prices of everything.

The key resistance for the index now remains in the 7,700 GBP region, which was the double top formation heading into the COVID crash. If the index jumps above it, the medium-term target could be 8,000 GBP.

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