Britain’s main stock indexes ended Friday’s shortened trading session lower, but the commodity-heavy FTSE 100 outperformed many of its global peers in 2022, in a year that saw markets roiled by the Ukraine war, inflation and concerns of recession.
The FTSE 100 slipped 0.8%, with losses of between 1% and 2.7% in consumer staples, energy and industrial stocks weighing on the index.
“Even though the UK markets have enjoyed better luck than their peers, despite the economic and political upheaval, the overall mood of the market is likely to remain sombre,” said Kunal Sawhney, CEO of equity research firm Kalkine Group.
“With COVID-19 still knocking on the doors, the rise may be short-lived,”
Britain’s benchmark index ended the year slightly higher in contrast to the sharp drop in U.S. and European markets.
“The FTSE 100 is more of an outward looking global index that does not reflect the fundamentals of the UK economy,” Victoria Scholar, head of investment at interactive investor, said in a note.
Scholar said the index benefited this year from energy stocks and miners. The sectors gained 41.8% and 23% for the year, respectively.
Britain’s more domestically oriented mid-cap index, closed the last trading session 0.8% lower, slumping 19.7% this year, its worst performance since 2008.
“The FTSE 250 is more closely correlated to the UK economy and has been weighed down by this year’s economic and political uncertainty,” Scholar said.
2022 saw UK markets face the tumultuous change in the country’s political leadership, a cost-of-living crisis and a hawkish central bank, with traders now fearful of the economy tipping into a recession next year.
Adding to the downbeat note, the UK’s annual house price growth slowed to 2.8% in December from 4.4% in the previous month, according to mortgage lender Nationwide. The home construction sector slipped 2.3%.
The Bank of England is expected to raise interest rates by 25 basis points in February.
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