The FTSE 100 was lower in early trade on Thursday before recovering as the recent rally in global stocks showed signs of consolidation after a surging recovery rally from Trump tariffs that has taken UK and US stocks into positive territory for the year.
Lower oil prices were the main detractor from improving investor sentiment as investors reacted to Trump’s comments on Iran and prepared for a number of risk events, including central bank speeches.
London’s leading index had just turned positive on the session at the time of writing after falling 60 points in the very early stage of trade on Thursday.
“A big pullback in oil prices weighed on markets across Europe,” says Russ Mould, investment director at AJ Bell.
“Traders focused on the prospect of a US/Iran nuclear deal which could see economic sanctions lifted on the latter and potentially lead to greater supplies of oil. That weighed on shares in BP and Shell which pulled down the FTSE 100. Commodities trader Glencore was also weak.”
Investors also digested stronger-than-expected UK GDP figures, which showed the economy successfully navigated a number of risks in Q1 to produce growth of 0.7% – the fastest pace of growth for a year.
However, analysis of the numbers reveals that the uptick in activity can be attributed to businesses preparing for the trade war as opposed to any meaningful improvement in demand.
“The better-than-expected growth snapshot also appears to have underwhelmed investors,” explained Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“UK GDP data may have surprised on the upside, but the upswing in activity risks fizzling out given the uncertainty on the horizon. There was a surge in business investment during the quarter, after a fall at the end of last year. With the threat of tariffs hovering which looked set to push up prices, it looks like there was a spell of buying of machinery and IT.”
FTSE 100 movers
Aviva shares helped the FTSE 100 turn positive with a 2% gain after releasing a very respectable round-up of Q1 trading. General insurance premiums rose 9%, wealth flows boosted AUM, and retirement sales increased 4%.
“Aviva’s prowess as an insurance titan shone through in the first quarter with strong signals across the board. The benefits of recent acquisitions are starting to manifest with both new business and the Probitas deal driving General Insurance premiums up 12% to £2bn in the UK and Ireland,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“Meanwhile, last year’s acquisition of assets from AIG helped spur a 19% increase in Protection and Health Sales. And despite a major client loss, net flows into Wealth were positive at 5%.”
JD Sports was the FTSE 100’s top riser as investors bought into the sports retailer after Footlocker shares soared 60% in the US pre-market on a takeover approach from Dick’s Sporting Goods.
Natural resources shares BP, Glencore, and Antofagasta were among the fallers amid lower commodity prices. Recent gains for the sector have also created short-term profit-taking opportunities for traders.
3i was the top faller after the investment trust reported NAV growth that fell short of analyst estimates. 3i shares were down 7% despite NAV increasing 22% in the year to 31 March.