The FTSE 100 carved out minor gains on Tuesday as mixed data from the UK and China provided insight into two of the world’s major economies.
China’s economy expanded faster than expected in the first quarter growing 4.5% vs the 4% estimated by economists. The data is good news for the global economy and will be particularly helpful for the FTSE 100’s natural resources sector.
“The relaxation of Covid restrictions was always going to result in stronger economic activity. The key question is for how long it can sustain this momentum,” said Russ Mould, investment director at AJ Bell.
The UK’s economy showed another sign of slowing down on Tuesday with a rise in unemployment and a decrease in job vacancies. The UK’s unemployment rate rose to 3.8% from 3.7% in the three months to February. Average wage growth accelerated to 5.9% in the year to February.
“The UK economy is already flatlining with high inflation a pernicious force, but there’s been a fall in vacancies and rise in unemployment, which should add to disinflationary forces building up,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
“Open positions are down 4% on the January to March quarter compared to the previous three months, while the unemployment rate rose to 3.8%. This is likely to be music to the ears of Bank of England policymakers, who want to see evidence that the tight labour market is easing, before taking the pedal off rate hikes.”
As indicated by Streeter, the bad news in the economy may prove to be good news for equity markets looking forward to the eventual slowdown in rate hikes.
FTSE 100 risers
Entain shares were up 5.8% at the time of writing after the betting company released a positive Q1 trading update. Their US joint venture provided a reason for optimism, with 70% revenue growth over the period.
“The cost-of-living crisis can’t deter punters from enjoying a flutter across Entain’s suit of brands, including Ladbrokes and partypoker to name a couple. First quarter performance was strong, albeit mainly in line with market expectations, with active customer numbers reaching record levels,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
Miners were among the top risers following the better than expected China GDP data. Fresnillo gained 3% to 799p while Anglo American added 2.8% to 2,791p.
Also helping Fresnillo higher was an upgrade by UBS, who raised Fresnillo to ‘neutral’ with an 825p price target.
FTSE 100 fallers
Despite an upgrade from UBS, Centrica was the FTSE 100’s top faller at the time of writing shedding 2% of its value. The utilities company has added 50% from their October lows and today’s decline can be attributed to profit-taking.
GSK was down 1.3% after agreeing to acquire Bellus Health Inc for $2bn.