The FTSE 100 was broadly flat on Thursday as investors digested soft Chinese and encouraging UK economic data.
London’s leading benchmark started on the front foot, but early gains diminished and the index traded sideways as the session progressed.
“The FTSE 100 ticked higher on Thursday morning after decent gains in the US and Asia overnight and as UK GDP figures came in as expected,” said AJ Bell head of financial analysis Danni Hewson.
“Gains in the US followed inflation figures which were a smidge lower than anticipated, solidifying expectations the Federal Reserve will cut interest rates at its next opportunity in mid-September. Later today, US retail sales and the latest numbers from Walmart will tell the market plenty about the state of US consumer demand and whether recent fears over recession have much credence to them.”
Global equities have faced a series of tests this week, including US and UK inflation data and Chinese retail sales and industrial production.
Although the gains were mild in London at the time of writing, stocks have overcome these hurdles without any major disruptions, and investors will now focus their attention on when central banks will cut interest rates next.
Upbeat UK GDP data would have helped lift the mood on Thursday, although the impact on UK stocks was minimal. Traders will be more concerned about the implications for rates in the coming months.
“This morning’s UK GDP figures showed the economy continuing to expand at a solid-enough clip in the second quarter, with the economy having grown by 0.6% QoQ in the three months to June, just a touch slower than the BoE’s 0.7% forecast,” said Michael Brown Senior Research Strategist at Pepperstone.
“Naturally, with the BoE having now delivered the first Bank Rate cut of the cycle, at the August MPC meeting, and policy set to become gradually less restrictive from here on in, the monetary policy backdrop is set to become increasingly supportive.”
Admiral was the FTSE 100’s top riser after announcing a special dividend on the back of a bumper H1 trading update. The insurers revenue soared over 40% and profit before tax followed suit.
“Insurer Admiral is reaping the rewards today of having steered its ship successfully through choppy waters when the inflationary storm was at its height,” Danni Hewson said.
“Unlike its competitors, Admiral hiked premiums as it passed on extra costs to customers. While this lost it business at the time, it now means the company is better positioned to be competitive, assisted by an easing in claims cost inflation which is helping it to attract more customers.
“This is the very essence of taking painful decisions in the short term for the long-term benefit of the company and shareholders are applauding today’s better-than-expected results, buoyed by a bumper increase in the first-half dividend.
Admiral shares were 7% higher at the time of writing.