Earnings season holds the key as FTSE 100 continues bullish run back towards 8,000

The FTSE 100 is closing in again on the 8,000-point milestone it breached for the first time ever earlier this year, with five weekly gains in a row close to putting the index in official bull market territory.

Now let's take a look at why this is happening and what will be needed for a new bull market to be achieved. Recall that, On 15 March, there was a market collapse larger than those following Russia's invasion of Ukraine and following Liz Truss's disastrous 'mini budget', with Jeremy Hunt's Budget overshadowed by the biggest fall since the start of the pandemic.

Having breached 8,000 exactly a month earlier, and notched an all-time intraday high of 8,047.06 the day after before a period of consolidation in the 7,900s, the Footsie fell almost 4% on the day of the Budget to close at 7,344.45, triggered by Credit Suisse joining Silicon Valley Bank in collapsing and sending paroxysms of worry around markets that a wider banking crisis could follow. But, after a wobbly couple of weeks, since then the FTSE 100 has been rebuilding. From the start of the week after, 20 March, on 7th June has risen 7.75%, with only four down-days in that time, to clamber back to less than 100 points from the 8K level again.

In order to constitute an 'official' bull market, the index will need to have risen at least 20% over a period of two months or more.

If London's blue-chip index keeps consistently gaining ground, we would need to wait until 22 May to tick the bull market box.

But, just as it did not wholly make sense at the time of the initial bullish run to 8,000 back at the start of the year, what's leading to the stock market confidence is a strange and far from convincing brew.

On the positive side, there has been some encouraging macroeconomic data, including UK consumer confidence recently reaching its highest point since before Russia's invasion of Ukraine and the latest PMI data showing the recovery in the private sector is gaining momentum. Furthermore, the apparent value on offer among the London Stock Market's ranks appears to be attracting no end of private equity wolves, with Sureserve (LON:SURS) and Network (LON:NETW) International today's marks, and approaches for THG (LON:THG) and John Wood (LON:WG), Dechra Pharmaceuticals (LON: DPH), Industrials REIT (LON:MLII), Unbound (LON:UBGU) and Hyve (LON:HYVE) in the past couple of weeks.

Particularly, these have been small and mid-caps, maybe indicating confidence is still tentative. Flipping the coin to the pessimistic side, UK retail sales yesterday showed a 0.9% decline, missing forecasts by a fair chalk, and a survey of UK consumers by UBS found nearly four in 10 people expect their financial situation to worsen in the next 12 months.

Inflation earlier this week also doggedly remained above 10%, with households remaining under pressure from continuing elevated energy and food prices.

Near term, the situation for consumers is expected to remain difficult as wages have remained behind inflation, meaning real incomes are falling further, while a housing market correction is still unfolding and financial conditions remain tight. There's also more US data pointing to a growing risk of a recession stateside.

After the strong run, the rush of earnings reports in London and New York in the next few weeks are likely to be key, with a deluge of FTSE names next week (including big banks Barclays (LON:BARC) and NatWest (LON: NWG) next week, Lloyds (LON:LLOY) and HSBC (LON:HSBA) the week after) and other consumer-facing giants (Unilever (LON:ULVR), Reckitt (LON:RKT), AstraZeneca (NASDAQ:AZN), Whitbread (LON:WTB)), along with the US megacap tech groups (Alphabet (NASDAQ:GOOGL), Microsoft (NASDAQ:MSFT), Meta (NASDAQ:META) and Amazon (NASDAQ:AMZN) all next week). Read more on Proactive Investors UK.