Consumer stocks helped the FTSE 100 gain on Monday as the Uk economy returned to growth in July and falling natural gas prices increased hopes inflation may soon start to slow.
The FTSE 100 pressed ahead, rising 1.3% in late morning trading as a collection of consumer-focused stocks pulled the blue chip index higher.
Analysts commented the 0.6% growth in consumer-facing services output over July served to breathe fresh life into the FTSE 100’s top performers, following a rise in consumer spending due to the hot weather and a wave of entertainment events, including the country’s hosting of the Women’s Euros and the Commonwealth Games.
“Given all the talk of recession, businesses will be reassured to hear that the economy grew in July, at around its long-term trend rate. Consumer spending was reasonably strong, as hot weather, a strong sporting schedule and holiday bookings boosted retail and recreation activities,” said Institute of Directors chief economist Kitty Ussher.
PwC economist Jake Finney added: “The UK economy grew by a modest 0.2pc on a month-on-month basis in July, following its 0.6pc contraction in June 2022.”
“Consumer-facing services grew by 0.6pc in July, following a flat month in June. The sector was helped by record-high temperatures and one-off events, such as the UK’s hosting of the Women’s Euros and the Commonwealth games.”
Consumer stocks gain
Grocery shares gained, with Sainsbury’s rising 4.3% to 211.4p and Tesco climbing 4% to 249.5p, while B&M increased 3.3% to 362.5p and Associated British Foods rose 2.7% to 1,392.5p.
Fashion companies also climbed higher, with JD Sports Fashion rising 3.6% to 130.7p and Next gaining 2.8% to 6,050p.
Mining companies rise
Mining companies rose on the back of supply risks in China and a weakening dollar ahead of US inflation data on Tuesday, with Anglo American shares increasing 4.1% to 3,047p, Glencore climbing 3.2% to 504.1p, Antofagasta gaining 2.6% to 1,226.7p and Rio Tinto rising 2.5% to 4,985.5p.
Oil prices
Meanwhile, oil prices rose thanks to a weaker dollar and supply uncertainty, with the price of benchmark Brent crude increasing 1% to $93 per barrel.
Shell shares gained 1% to 2,323p and BP shares climbed 1.7% to 458.6p.
Natural gas prices sank as investors looked forward to potential intervention by the EU.