The FTSE 100 rallied with global equities on Friday as investors cheered the avoidance of a US government shutdown. Developments in Washington came as a welcome injection of positivity into stock after a week dominated by the uncertainty of Donald Trump’s tariffs.
- Hopes US government shutdown will be averted
- UK GDP shrinks 0.1% in January
- US futures rally
- Berkeley Group reaffirms guidance
London’s leading index rose 0.35% as S&P 500 futures rebounded and European cash equities ticked higher. The German Dax was 0.5% higher at the time of writing.
“They were buoyed by hopes that the US government would avoid a shutdown of non-essential services after Senate leader Chuck Schumer said he would vote to pass the latest funding bill,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
The boost provided by the aversion of a US government shutdown superseded any concerns about UK GDP, which shrank 0.1% in January, missing economist’s estimates of 0.1% growth.
“The UK economy is stuck in the slow lane, showing no signs of growth in the first month of the year. This latest data just goes to show the mountain to climb for the Chancellor to reclaim momentum and get Britain growing at pace in 2025,” said Scott Gardner, investment strategist at Nutmeg.
“While retail sales improved in January after a sluggish run into Christmas, manufacturing PMI’s remain in contraction territory. At the same time, consumer confidence stayed low at the start of the year despite wage growth remaining higher than inflation during the final quarter of last year. The latter boost to real incomes could be a potential tailwind for consumption activity in the months ahead.”
FTSE 100 movers
The FTSE 100’s rally was broad, with miners and housebuilders among the sectors leading the charge. The poor GDP reading made a rally in retailers all the more surprising as Next added 1.3% and Kingfisher jumped 2.1%.
Housebuilders were in focus after Berkeley Group issued a trading statement and reaffirmed profit guidance of £975 million over FY25 and FY26.
“There were no surprises at the door as Berkeley delivered its third-quarter update. Remarks echoed the trend seen across other housebuilding peers, with sales rates improving over the year. While these are now running ahead of last year’s level, there’s still some way to go to reach the boom of three years ago,” explained Aarin Chiekrie, equity analyst, Hargreaves Lansdown.
“Management pointed to a need for greater economic stability and interest rate cuts to help drive the next leg of demand.”
Berkeley shares rose 2%, helping Persimmon and Taylor Wimpey rebound from disappointment with yesterday’s release of the most recent RICS survey.