The FTSE 100 hit a brand new intra-day excessive on Friday (17 January), peaking at 8,508 factors within the early afternoon. It could be even greater by the point you learn this.

Cussed inflation, rising enterprise prices and threats of US commerce tariffs don’t appear to be holding anybody again.

In reality, inflation information would possibly even have helped enhance optimism. The UK’s December determine fell to 2.5%, not fairly on the Financial institution of England’s 2% goal however it’s the precise course.

US inflation outlook

And the US core shopper price index (CPI) dropped to three.2% 12 months on 12 months, with 3.3% anticipated. Once more nonetheless some strategy to go, however that’s optimistic.

Sterling falls could have helped enhance UK inventory costs too.

Multinational firm earnings are carefully tied to the US greenback, and the pound has slipped 9% from $1.34 in September to $1.22 as I write.

On the playing cards

I feel bull market indicators have been within the air for a lot of the previous 12 months, and I reckon it reveals within the banking sector.

UK traders appear to have been largely inward-looking for the previous few years. However a look at what’s been taking place to the Barclays (LSE: BARC) share price reveals a giant change.

Barclays shares are up 104% prior to now 12 months. Crucially, it’s perhap probably the most outward-looking and various of the large Footsie banks.

World banking

At Q3 time, Barclays reported a 6% rise in Funding Financial institution earnings, with a 3% enhance for World Markets earnings.

If the incoming US administration relaxes some rules concerning funding banking as anticipated, the world outlook for the sector would possibly get even brighter.

Analysts are already forecasting rises in earnings and dividends for Barclays within the subsequent few years. The expected dividend yield for 2024 is down to three% after the share price rise, thoughts. So perhaps the shares are pretty valued for now.

Although Friday’s bullish inventory market is trigger for cheer, there’s a little bit of a fly within the ointment.

Causes for warning

The Christmas retail interval was disappointing, which I feel might put a drag on markets and even perhaps pull the outlook for the banks again a bit.

Forecasters had predicted a 0.4% month-on-month rise for retail gross sales in December. However figures simply out from the Workplace for Nationwide Statistics as a substitute present a 0.3% drop.

Meals retailers confronted the largest hardship, with a 1.9% fall.

It raises the concern that the UK financial system might need shrunk within the closing quarter of 2024. Nonetheless, there’s a vivid aspect even to that. Together with the drop in inflation, it absolutely boosts the prospect of an rate of interest minimize at February’s Financial Coverage Committee assembly.

What does it imply?

So what ought to traders do in regards to the booming FTSE 100? Promote up and pocket some revenue? Or perhaps pile in now it appears to be on the up?

I’m happy to see the optimism, however it doesn’t change something for me. I’m seeking to put money into corporations with nice long-prospects at good costs. Identical as all the time.