The FTSE 100 once again broke to all-time highs on Wednesday as optimism around UK economic growth boosted sentiment in UK stocks.
The index was also support by another strong session from BP after their shares received an ambitious 1,000p price target from analysts at Barclays. BP shares were 3% at the time of writing on Wednesday.
General sentiment improved on Wednesday after the National Institute of Economic and Social Research (Niesr) Think Tank said they expected the UK economy to avoid recession.
⚡️The return of the ‘squeezed middle’⚡️
— National Institute of Economic and Social Research (@NIESRorg) February 8, 2023
The UK is likely to avoid a ‘protracted #recession’ in 2023, but for million of #households it will certainly feel like a recession⚠️
Our latest outlook for the UK economy is out now
⬇️⬇️⬇️#CostOfLivingCrisis https://t.co/YA7WplIo9N
The Think Tank’s prediction is at odds with the Bank of England’s forecast of a recession – although the bank have recently improved their outlook from a prolonged downturn, to a short and shallow contraction.
“The tide of optimism washing over the London market is being pushed higher with the latest economic assessment judging that the UK could avoid a recession,” said Susannah Streeter, senior investment and markets analyst Hargreaves Lansdown.
With the outlook for the UK economy improving in most quarters, the FTSE 100 was helped 0.6% higher to 7,919. The index had hit 7,933 earlier in the session – a fresh intraday all-time FTSE 100 high.
UK domestic stocks
While BP was doing a lot of the heavy lifting on Wednesday, the FTSE 100’s UK-focused stocks provided support for the index after the more optimistic UK economic prediction.
Housebuilders and retailers were among the top risers.
The homebuilding sector was spurred on by an upbeat release from Barratt Developments. Barrett’s said although forward sales were considerably lower than this time last year, they had seen signs of a revival in January.
“While the outlook for the second half of Barratt’s financial year remains uncertain, we’re cautiously optimistic for the group’s prospects in the long run. Recession fears have put housebuilders in a tricky spot, but Barratt’s significant net cash position of £965m gives it plenty of breathing room, even if the housing market deteriorates further,” said Aarin Chiekrie, equity analyst at Hargreaves Lansdown.
Barratt’s shares rose 2.2% but it was Persimmon, storming ahead by 3.2%, that was the FTSE 100’s top riser at the time of writing. Persimmon will release final results 1st March.
Fraser Group’s consumers will enjoy a healthier UK economy and investors bid their shares up by 3% to 808p. The same sentiment was shared by Next with the bellwether retailer adding 2.8%.