The FTSE 100 index experienced a modest uptick on Thursday, buoyed by unexpectedly robust UK economic growth figures and positive corporate earnings reports. The index concluded the day with an increase of 30.41 points, or 0.3%, finishing at 10,589.99. In tandem, the FTSE 250 rose by 113.91 points, a 0.5% gain, reaching 22,779.50, while the AIM All-Share saw a 1.84-point increase, closing at 797.86.
Economic Growth Surprises Markets
Recent data revealed that the UK economy accelerated its growth in February, outpacing analysts’ expectations. Monthly GDP rose by 0.5%, following a revised growth of 0.1% in January, which had initially shown no growth. This performance significantly exceeded the consensus forecast of 0.1%.
Sanjay Raja, Chief UK Economist at Deutsche Bank, remarked that the figures “smashed expectations,” suggesting that the UK entered the ongoing energy crisis with a stronger economic footing than anticipated. However, he cautioned that this upward trajectory is unlikely to persist. “Households are already feeling the pinch from the Iran energy shock, which is constraining disposable incomes and discretionary spending. Fuel prices have surged over 20% since the onset of the oil crisis, and dual fuel bills are expected to rise similarly over the summer,” Raja noted. He anticipates “more sluggish growth into Q2 2026 and beyond.”
The positive economic indicators arrived alongside comments from Bank of England Governor Andrew Bailey, who stated that the central bank would not hastily increase interest rates in light of the energy crisis. At a recent International Monetary Fund meeting in Washington, Bailey acknowledged the complexity of the decision-making process ahead of the BoE’s upcoming meeting on April 30, emphasising the uncertainties that lie ahead.
Corporate Highlights: Tesco and Intertek Lead the Charge
On the corporate front, Tesco’s shares surged by 4.7% after the supermarket chain reported annual profits that exceeded expectations and raised its free cash flow guidance. For the fiscal year ending February 28, Tesco’s pretax profit rose by 8.5% to £2.4 billion, surpassing the consensus projection of £3.1 billion. Clive Black, an analyst at Shore Capital, praised Tesco’s performance as “authoritative” and lauded its operational efficiency.
Intertek, the assurance and certification company, saw its shares rocket by 9.0% after rejecting a takeover bid from EQT Fund Management, which valued the company at approximately £8 billion. Intertek described the unsolicited offer as “fundamentally undervalued,” reflecting its strong growth prospects. The stock has risen significantly over the past week, partly due to a strategic review that includes potential divestitures.
Entain, the owner of Ladbrokes, also posted strong results, with shares climbing 6.0% as it reaffirmed its annual guidance, citing significant momentum in its UK & Ireland and Australian segments.
Conversely, easyJet faced a decline of 5.0% as it projected a larger-than-expected pretax loss for the first half of its financial year, primarily due to soaring fuel costs. The budget airline anticipates reporting a pretax loss between £540 million and £560 million, compared to a £394 million loss in the previous year.
Global Markets Respond to Economic Signals
Across Europe, market reactions were mixed. The CAC 40 in Paris concluded the day flat, while the DAX 40 in Frankfurt saw a 0.4% increase. In the United States, equity markets exhibited a positive outlook, with the Dow Jones Industrial Average rising by 0.1%, the S&P 500 gaining 0.3%, and the Nasdaq Composite advancing by 0.4%. These gains were largely driven by optimistic sentiments surrounding potential progress in US-Iran negotiations.
Despite the optimistic corporate earnings and economic data, crude oil prices continued to climb, with Brent crude reaching $98.39 per barrel, a rise from $95.40 earlier in the week. This increase in oil prices comes amid ongoing tensions, with US Defence Secretary Pete Hegseth indicating a commitment to blockading Iranian ports if diplomatic resolutions fail.
The yield on the US 10-year Treasury remained stable at 4.29%, while the yield on the 30-year Treasury rose slightly to 4.91%. The British pound weakened against both the US dollar and euro, trading at 1.3532 and 1.1489, respectively.
Why it Matters
The recent performance of the FTSE 100 and accompanying economic data reflect a complex interplay of factors influencing the UK economy. While the immediate growth figures are encouraging, the looming impacts of energy price shocks and geopolitical tensions pose significant risks to sustained economic momentum. Investors and policymakers will need to navigate these challenges carefully, as consumer spending and corporate profitability may face increased strain in the months ahead. The resilience demonstrated by key companies like Tesco and Intertek indicates that certain sectors may still thrive, but the broader economic landscape remains precarious, necessitating vigilant observation and strategic decision-making.
