The FTSE 100 experienced a modest uptick on Thursday, buoyed by unexpected UK economic growth and positive trading updates from major companies. The index closed at 10,589.99, marking an increase of 30.41 points, or 0.3%. Meanwhile, the FTSE 250 rose by 113.91 points (0.5%) to close at 22,779.50, and the AIM All-Share saw a slight gain of 1.84 points (0.2%), ending at 797.86.
UK Economic Growth Surprises Analysts
In a welcome development, the UK economy demonstrated stronger-than-anticipated performance in February, with GDP expanding by 0.5%. This figure surpasses the consensus expectation of a mere 0.1% growth and follows a revised-up January figure of 0.1%, which had initially indicated no growth. Sanjay Raja, Chief UK Economist at Deutsche Bank, remarked that this robust figure suggests the UK entered the ongoing energy crisis in a more resilient position than previously feared.
However, Raja cautioned that this upward momentum is unlikely to persist. “Households are already beginning to feel the financial strain from the Iran energy shock, which will negatively impact disposable incomes and discretionary spending,” he warned. With fuel prices rising over 20% since the onset of the oil crisis and similar increases expected in dual fuel bills, a slowdown in growth is anticipated for the second quarter of 2026 and beyond.
Market Reactions and Sector Highlights
The encouraging economic data coincided with a statement from Bank of England Governor Andrew Bailey, who indicated that the central bank will not hastily raise interest rates in response to the energy crisis. During the International Monetary Fund’s spring meeting in Washington, he highlighted the complexities surrounding the current economic landscape, noting, “We’re not going to rush to judgments on those things, because there are a lot of uncertainties around this.”
In the European markets, the Cac 40 in Paris remained flat, while the Dax 40 in Frankfurt experienced a 0.4% increase. Meanwhile, across the Atlantic, US markets also saw modest gains, with the Dow Jones Industrial Average up by 0.1% and the S&P 500 and Nasdaq Composite climbing 0.3% and 0.4%, respectively, following a rally driven by optimism surrounding US-Iran negotiations.
Corporate Developments Boost Investor Confidence
On the FTSE 100, shares of Intertek surged by 9.0% after the company rejected a £5,150 per share bid from EQT Fund Management, asserting that the proposal undervalued its future prospects. The share price has risen significantly, reflecting a positive market response to Intertek’s ongoing strategic review.
Ladbrokes owner Entain also saw a notable rise of 6.0%, supported by strong performance in its UK & Ireland and Australian segments, which exceeded revenue expectations. Tesco’s shares increased by 4.7% following the announcement of annual profits that outstripped forecasts, with pre-tax profit climbing 8.5% to £2.4 billion, alongside an increase in free cash flow guidance.
In contrast, easyJet faced a setback, with shares plummeting by 5.0% as the airline announced a larger-than-anticipated pretax loss, attributed to rising fuel costs.
Global Economic Outlook and Commodity Markets
The upward trajectory of oil prices continued, with Brent crude trading at $98.39 per barrel, up from $95.40 the previous day. US Defence Secretary Pete Hegseth reiterated a firm stance against Iran, stating that US naval forces would blockade Iranian ports indefinitely if negotiations fail, further complicating the global energy landscape.
While gold prices remained stable at $4,802.13 per ounce, the yield on US 10-year Treasuries held steady at 4.29%. The pound weakened slightly against the dollar and the euro, trading at 1.3532 and 1.1489, respectively.
Why it Matters
The performance of the FTSE 100 and the broader UK economy highlights the delicate balance facing investors in a world fraught with geopolitical tensions and rising costs. The positive GDP figures provide a fleeting sense of optimism, yet the looming energy crisis threatens to dampen consumer spending and economic growth. Stakeholders must navigate these complexities carefully, as the trajectory of the UK economy and corporate earnings will likely hinge on how effectively they manage the impacts of rising energy prices and fluctuating consumer confidence in the coming months.
