FTSE 100 extends gains after the US grows more than expected

The FTSE 100 extended gains on Thursday afternoon after the United States grew more than expected in the 4th quarter and US tech stocks continued to rally. US GDP grew 2.9% on an annualised basis, compared to estimates of 2.6% growth.

US GDP figures released on Thursday provided the cue for investors to buy risk assets on hopes the damaging recession predicted last year may not come to pass.

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After the release of US GDP today, attention will quickly shift to tomorrow’s instalment of US personal spending and housing data. These data points will influence the Federal Reserve’s next decision on interest rates due next month. 

The FTSE 100 was gaining 0.3% at the time of writing.

Despite a raft of updates from UK companies, the focus has largely been on the United States this week and UK equities have broadly been ebbing and flowing in line with markets over the pond.

In addition to key economic data, the US tech sector has been a major factor driving sentiment as giants such as Microsoft and Tesla update investors.

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Tesla beat earnings expectations overnight and jumped over 10% on Thursday as US trade began.

Diageo

FTSE 100 stalwart Diageo disappointed markets on Thursday and dragged on the index after the alcoholic drinks company said they saw weaker organic growth. Nonetheless, reported net sales in the six months ended 31st December grew 18.4% in a challenging environment.

“It’s glass half empty time for Diageo, which poured out some resilient results showing a surge in super-premium brand drinks, but disappointed in its outlook for the all-important American market,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“Shares fell as investors eyed up the lack of cheer ahead as Americans tighten their belts amid the downturn. Diageo has been benefiting from ongoing pandemic habits, when people turned to favourite pricier tipples, including the likes of Johnnie Walker and Tanqueray, for lockdown distraction.”

A sharp increase in net asset value (NAV) helped 3i Group shares rally 9% on Thursday. The private equity and infrastructure group enjoyed a 26.8% increase in NAV for the nine months to 31 December 2022.

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