The FTSE 100 staged a rally on Friday morning with the house builders leading the way after suffering sharp declines earlier in the week.
Barrett Developments was the top riser gaining some 5% and Persimmon was 4% stronger while the FTSE 100 was 0.95% higher at the time of writing.
Banks were also gaining as the same sentiments driving housebuilders higher also saw support for Lloyds, Natwest and Barclays. Lloyds shares were 3.4% higher while Natwest gained 2.9%.
In a sign of improving sentiment – albeit from a very low base – defensive names such as Unilever, Reckitt Benckiser, and BAE Systems were all negative on the day.
In what has been an extremely volatile week, there was a general recovery in UK assets on Friday with GBP/USD gaining 0.3% to 1.1148 and UK 10-year yield dropping to 4.07%. A better than expected read on UK Q2 GDP will also help improve the mood after the original 0.1% contraction was revised to 0.2% growth.
This will ease any concerns of an imminent technical recession but the coming quarters could well see the UK slip in contraction and recession.
“The Office of National Statistics has released its revised view of recent GDP data this morning. Growth in Q2 of this year has been revised up from -0.1% to growth of 0.2%. Hardly a blistering pace, but enough to mean that the UK has not already entered recession, contrary to some forecasters,” said Steve Clayton, Fund Manager at HL Select.
Any further pick up in UK assets will hinge on the market’s perceptions of the government’s ability to provide some balance to their radical spending plans and tax cuts. The Tory will hold their conference this weekend and markets will be watching closely for any signals about their intentions to push forward with their proposals.
As we noted yesterday, we will receive updates from consumer facing companies such as Tesco and Greggs next week and investors will be keen to gauge the health of the UK consumer following a raft of retail profit warnings this week.