The FTSE 100 managed to rise on Thursday, closing up by 47.58 points or 0.5%, at 10,372.93, buoyed by positive UK GDP data and decreasing oil prices. This uptick comes in the midst of ongoing political upheaval, notably the resignation of Health Secretary Wes Streeting, which has raised questions about the future of Prime Minister Sir Keir Starmer’s leadership.
Political Shake-Up and Market Response
The political landscape in the UK is currently in a state of flux. Wes Streeting’s resignation has added weight to calls for Sir Keir Starmer to step down following disappointing local election results. Starmer, who led the Labour Party to victory in 2024, is under increasing pressure, with over 80 MPs urging him to resign. Streeting publicly criticised the “drift” in government leadership and hinted that he would not lead Labour into the next election, though he did not formally announce a leadership bid.
Despite the political instability, the bond market showed resilience. The yield on 10-year gilts fell to 5.00%, down from 5.07% the previous day, reflecting a measure of investor confidence amidst the chaos. The pound, however, experienced mixed fortunes, slipping against the dollar to 1.3480 but rising against the euro to 1.1549.
Positive Economic Signals
Encouraging economic indicators helped to steady investor sentiment. The UK’s gross domestic product (GDP) grew by 0.6% in the first quarter of 2026, a significant improvement from the previous quarter’s revised growth of just 0.2%. Analysts at Lloyds Banking noted that while the GDP figures represent a marked improvement, much of this growth occurred before the intensification of the conflict in Iran, suggesting that current conditions may not sustain this pace.
The decline in oil prices also played a key role in supporting the equity markets. Brent crude futures for July delivery dipped to $104.92 a barrel, down from $107.33, as investor optimism increased following a meeting between US President Donald Trump and Chinese President Xi Jinping. Both leaders agreed on the necessity of keeping the Strait of Hormuz open for energy transport, a critical factor given its importance for global oil supply.
Corporate Highlights
In stock market movements, Legal & General surged by 6.2%, following speculation over potential bids from various financial entities, although CEO Antonio Simoes stated that no discussions regarding a sale were currently taking place. Conversely, 3i Group’s shares plummeted by 13% after disappointing sales results from its investment in Dutch retailer Action, signalling investor concerns regarding its reliance on a single holding.
In brighter news, Tate & Lyle’s stock jumped 45% after confirming a takeover proposal from US firm Ingredion, which values the company at £2.65 billion. Spire Healthcare also saw a significant rise of 49% as it backed a takeover bid from Toscafund Asset Management, further reflecting the robust activity in the market despite broader uncertainties.
Global Market Trends
European markets mirrored the UK’s positive performance, with the CAC 40 in Paris rising 0.9% and the DAX 40 in Frankfurt advancing by 1.3%. In the US, major indices also posted gains, with the Dow Jones up 0.8% and the Nasdaq Composite rising by 1.0%. Tech giant Cisco’s shares soared by 15% after reporting stronger-than-expected quarterly results, reflecting robust demand for its technology.
As the week comes to a close, investors will be closely monitoring upcoming economic indicators, including US industrial data and manufacturing metrics from New York, which could further influence market sentiment.
Why it Matters
The current state of the FTSE 100 illustrates the complex interplay between political developments and market performance. While the resignation of a key government figure and the backdrop of political uncertainty could typically inspire caution among investors, the positive GDP figures and easing oil prices have provided a buffer. This resilience speaks to the market’s ability to adapt and respond to challenges, highlighting the importance of economic fundamentals in navigating political turbulence. As the situation evolves, staying attuned to these dynamics will be crucial for stakeholders across the spectrum.