The FTSE 100 rose on Friday as a rare domestic boost lifted spirits after a soggy week for UK stocks, which have suffered from rising oil prices.
A better-than-expected GDP reading helped lift the mood, with the FTSE 100 rising 0.6% driven by consumer-facing stocks, banks and financials.
“Today’s data shows GDP grew by 0.4% in July, according to the ONS, comfortably beating expectations for a contraction and following growth of 0.3% in June. Over the three months to July, the economy expanded by 0.4%, marking the eighth consecutive three-month period of growth,” said Susannah Streeter, Chief Investment Strategist, Wealth Club.
“While it’s far from a rip-roaring recovery, it does suggest the UK economy has more staying power than feared, particularly given the pressure households and businesses are facing from scorchingly high energy prices and elevated borrowing costs.”
But GDP wasn’t the only factor at play on Friday. Oil’s march higher paused as Brent fell 3%, easing fears of a series of interest rate hikes.
“Signs that crude prices and bond yields have at least stabilised for the time being allowed for a calmer start to proceedings on Friday after the fear factor ramped up on Thursday. The FTSE 100 was just about in positive territory and the DAX and CAC 40 solidly higher,” said AJ Bell investment director Russ Mould.
“It’s been a tricky few days for global equities. Up until now fixed income had largely borne the brunt of the growing concern about the Iran conflict and its impact on energy markets.
“Supported by solid earnings, stocks had largely been resilient despite the deteriorating situation in the Middle East. However, that resilience is being eroded thanks to a growing perception that diplomatic progress between the Tehran and Washington is a no-go in the short term.”
There was a lean towards quality again on Friday, with investors picking up many of yesterday’s best performers.
Hiscox rose again, adding 2%, as it was bearing down on all-time highs. Lion Finance Group was another financial among the risers, gaining 1.4%.
Banks HSBC, Barclays and Lloyds were also in favour, rising between 1%-2%. Games Workshop was the FTSE 100’s top riser as bargain hunters stepped in and bought the dip.
Two stocks hit this year by AI-disruption fears, Sage Group and the London Stock Exchange Group, were at the bottom of the FTSE 100 leaderboard.