Despite the sombre macroeconomic backdrop, the blue-chip FTSE 100 index is close to making new 12-month highs. This reflects the defensive composition of the index and its large exposure to international earnings and commodity markets.
With many strategists expecting a tough first half for equities the index may well continue to shine.
Despite macro challenges some stocks continue to outperform and are still making new 12-month highs, suggesting it isn’t all doom and gloom.
BANKS COASTING ON RATES TAILWIND
UK banks are in the ascendancy aided by rising interest rates, which bolsters their net interest margins. Index heavyweight HSBC (HSBA) is up over 8% in the last week, adding to 20% gains achieved in 2022 as analysts continue to upgrade earnings estimates.
According to Refinitiv data, consensus earnings estimates have been revised up by 20% over the last few months.
It is a similar story with Natwest (NWG), with its shares up 4.3% this week to notch a new 12-month high. Earnings revisions have been even stronger, up around a third over the last year.
Less well known but just as impressive is the performance of London-listed Georgian retail bank Bank of Georgia (BGEO), whose shares are up a staggering 67% over the last year and continue to make new 12-month highs.
Shares in pharmaceutical giant Astrazeneca (AZN), the largest listed company on the UK market, are up 3% this week, adding to 38% gains seen in 2022. Analysts remain positive on the company’s strong drug pipeline with many catalysts expected in the coming months.
BEST OF THE REST
Elsewhere, card and gifts retailer Card Factory (CARD) continues its remarkable recovery, with its shares doubling from October 2022 lows. Earnings estimates have made an abrupt turn after falling for months suggesting analysts are becoming less sceptical about the company’s prospects.
Since November, earnings estimates have increased by around 25% but remain 44% below where they stood a year ago.
Personal care group PZ Cussons (PZC), reached a new 12-month high this week suggesting confidence in its turnaround is gathering momentum. In September, the company raised its medium-term sales and margin targets and upped dividends by 5%.
Global luxury goods company Burberry (BRBY), gained 7% this week, taking the shares close to a new 12-month high. The stock gained 18% in 2022, driven by persistent upgrades to earnings estimates.
