FTSE 100: Another Down Week, Growth Concerns Weigh

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The UK's FTSE 100 On Friday, experienced further declines, primarily driven by a drop in homebuilders, as investors grew increasingly concerned about a possible recession following the Bank of England's significant interest rate hike. The Bank of England surprised the market with a larger-than-expected 50-basis-point rate hike on Thursday, prompted by inflation concerns. This led investors to increase their expectations of interest rates peaking at 6.1% in February and a higher likelihood of an impending recession.In a somewhat unexpected turn, retail sales showed an unexpected increase in May, indicating that most consumers were managing to cope with the impact of persistent inflation on their spending power.The prospect of an extended period of policy tightening dampened risk sentiment, following the hawkish stance of the US Federal Reserve and rate hikes implemented by major central banks, including Norway and Switzerland, on Thursday. While homebuilders, sensitive to interest rate changes, declined by 2.8%, Ocado sat at the bottom of the table as Amazon acquisition excitement dissipated. 

On the positive side of the ledger GlaxoSmithKline (GSK) shares have risen by 5.7% making it the top percentage gainer on the FTSE 100 index. The US-listed shares of the British drugmaker have also increased by 5.4% to $36.55 in premarket trade. This surge comes after GSK announced a settlement in the US Zantac litigation. The litigation pertained to claims that GSK's discontinued heartburn drug, Zantac, caused cancer. The settlement has successfully prevented the first case from proceeding to trial, which was originally scheduled to commence on July 24. GSK has not admitted any liability in this matter and has emphasised its determination to vigorously defend itself against any other Zantac-related cases. It is worth noting that as of the last close, GSK's London-listed shares have experienced a decline of approximately 5%, while its US-listed shares are down about 2% year-to-date.

FTSE Bias: Intraday Bullish Above Bearish below 7510

  • Below 7510 opens 7435
  • Primary resistanceis 7660
  • Primary objective 7430
  • 20 Day VWAP bearish, 5 Day VWAP bearish

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