FTSE up ahead of mini-Budget, oil prices continue to rise, tech stocks in vogue, and Saga and Dignity sink

“The FTSE 100 has a spring in its step despite the UK inflation rate going up again, and a potential cut in the country’s economic outlook when Chancellor Rishi Sunak announces his mini-Budget at lunchtime,” says Russ Mould, Investment Director at AJ Bell.

“Headwinds for consumers and businesses linked to the rising cost of energy, raw materials and more would suggest the Office for Budget Responsibility will downgrade its forecasts for GDP growth this year.

“Shares in retail companies have been weak in recent months as investors speculate there could be a sharp drop in consumer spending once the energy price cap goes up in April. Any measures by Sunak to help with the cost-of-living crisis could trigger a relief rally in the retail sector on the stock market.

“Energy stocks were a major force behind the FTSE 100’s 0.3% rise on Wednesday as Brent Crude oil prices crept even higher, up 1.3% to $116.97 per barrel.

“After last night’s rally in the tech-heavy Nasdaq index in the US, tech-related stocks were in vogue on the UK market including a 1% rise in Scottish Mortgage Investment Trust. Even Ocado managed to gain some fans, which is something it has struggled to do in a long time.

“It feels as if investor confidence is starting to improve following a big wobble in recent weeks linked to the shock of the Ukraine crisis and how inflationary pressures have intensified around the world. CNN’s Fear & Greed Index has gone from a reading of 19 a week ago, classified as ‘extreme fear’ to now sitting at 44 which is still in ‘fear’ territory but getting very close to neutral.

“A surge in Covid cases in recent months across the UK has clouded the picture for Saga over the near-term, causing its shares to slump. Yet the business remains confident of an eventual revival in cruise travel and making more money from its insurance offering.

“While a reduction in Covid rates would be good for Saga, the same cannot be said for funeral group Dignity. Its shares have also tanked on financial results, in its case this is partially down to a warning that excess death rates seen over the past two years may start to normalise, and that it will use more cash than it generates while it plays catch-up with investing in the business.”

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