FTSE recovers after recession rout, bitcoin bounces back and Sage impresses

“After the recession rout there was a calmer feel to market proceedings on Friday,” says AJ Bell Investment Director Russ Mould.

“A late recovery on Wall Street on Thursday may have helped investors’ mood but the up and down nature of trading is a reminder of just how febrile things are right now.

“It feels financial assets are starting to reflect the full impact of the tumultuous events of 2022 thus far. Anyone tracking the FTSE 100, which has been kept afloat by its commodities exposure, decent income and tilt towards value, isn’t getting a full picture of just how negative things are for stocks and shares right now.

“So while the UK’s flagship index is down a few percent year-to-date, the MSCI World, dominated by the once-mighty US stock market, is down more than 17%.

“The big technology stocks, which were trading on such elevated valuations, have been hit particularly hard amid patchy performance and a wider repricing of risk.

“Fed chair Jerome Powell did his best to douse some of the burning panic which had set in over the latest US inflation number and what it might mean for interest rates by suggesting talk of 0.75 percentage point rate hikes was off the mark.

“The modest recovery of bitcoin after this week’s cryptocurrency crunch will have done little to repair its status as a store of value as it sinks to half of last November’s peak level.

“Fitting the rather soporific mood of markets were results from accounting software firm Sage. The company may be about as exciting as John Major reading the dictionary, but the shares performed well off the back of strong first-half results.

“In uncertain times a mundane marvel like Sage is likely to get a warm reception from the market and a sizeable increase in recurring revenue and just being on track to hit expectations was enough to see it receive a gold star from investors.

“Next week’s tests for market confidence come in the form of US retail sales on Tuesday and UK inflation numbers on Wednesday. It feels like we could be in for a bit of a wild ride for some time though.”

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