The FTSE 100 experienced a modest yet significant uptick on Thursday, buoyed by unanticipated economic growth figures and positive corporate earnings reports. The index closed at 10,589.99, marking an increase of 30.41 points or 0.3%. This upward trajectory reflects broader trends in both the UK economy and international markets, with notable performances from key players such as Tesco and Intertek.
Economic Acceleration Surprises Analysts
Recent data revealed that the UK’s economic growth accelerated in February, exceeding analysts’ forecasts. Monthly GDP rose by 0.5%, a notable improvement from January’s revised figure of just 0.1%. This growth, significantly surpassing the consensus estimate of 0.1%, suggests that the UK is navigating the ongoing energy crisis stemming from geopolitical tensions with Iran with a stronger economic footing than previously anticipated.
Sanjay Raja, Chief UK Economist at Deutsche Bank, remarked that the data “smashed expectations,” indicating that the economy entered the current energy crisis on a more resilient note. However, he cautioned that this momentum may not be sustainable. “Households will have already started to feel the impact of the Iran energy shock, affecting disposable incomes and discretionary spending,” he noted, pointing to the 20% surge in fuel prices since the onset of the crisis.
Raja predicts that sluggish growth could persist into the second quarter of 2026 and beyond as the effects of rising energy costs take hold.
Corporate Earnings Drive Market Confidence
The day’s trading was further invigorated by robust earnings reports from key corporations. Tesco, the retail giant, reported a pre-tax profit increase of 8.5% to £2.4 billion for the year ending 28 February. The company’s adjusted operating profit edged up to £3.15 billion, surpassing both the consensus prediction of £3.1 billion and its own guidance range. This positive outcome prompted a 4.7% increase in Tesco’s share price, reflecting strong operational execution as described by Shore Capital analyst Clive Black.
Similarly, Intertek saw its shares soar by 9% after rejecting a bid of 5,150 pence per share from EQT Fund Management, asserting that the offer undervalues the company’s future prospects. The firm’s recent strategic review and potential divestiture of its Energy & Infrastructure division have contributed to a surge in its stock, which has risen over 25% in the past week.
Entain, the owner of Ladbrokes, also enjoyed a 6% increase in share price due to stronger-than-expected revenues in its UK and Australian segments, reinforcing positive market sentiment.
Global Market Trends Reflect Optimism
Internationally, US markets mirrored the optimism observed in London, with the Dow Jones Industrial Average up 0.1%, and both the S&P 500 and Nasdaq Composite climbing by 0.3% and 0.4%, respectively. The S&P 500 and Nasdaq reached new record highs as investors reacted positively to potential breakthroughs in US-Iran negotiations, although concerns about ongoing geopolitical tensions remained prevalent.
Oil prices continued their upward trend, with Brent crude trading at $98.39 per barrel, up from $95.40 the previous day. This escalation in oil prices could have substantial implications for inflation and consumer spending in the UK and beyond.
Meanwhile, Bank of England Governor Andrew Bailey addressed the possibility of altering interest rates during a speech at the International Monetary Fund spring meeting. He warned that the central bank is facing tough decisions regarding its monetary policy, especially given the uncertainties surrounding the energy crisis.
Market Volatility and Future Outlook
Despite the positive indicators, there are underlying risks that could temper growth projections. The yield on the US 10-year Treasury remained stable at 4.29%, while the 30-year yield widened slightly to 4.91%. Currency fluctuations also reflected market unease, with the pound slipping to $1.3532 from $1.3577.
In the FTSE 250, Morgan Sindall’s share price surged by 7.5% after the construction and fit-out firm raised its profit outlook for 2026 due to robust trading. Conversely, easyJet faced a downturn, with shares dropping by 5% after the airline warned of larger-than-expected losses driven by escalating fuel costs.
Why it Matters
The resilience demonstrated by the FTSE 100 amidst challenging economic conditions underscores the importance of corporate performance and strategic foresight in weathering global uncertainties. As the UK grapples with rising energy prices and geopolitical tensions, the ability of companies to adapt and thrive will be crucial. Moreover, the Bank of England’s cautious approach to interest rate adjustments will significantly influence consumer confidence and spending, shaping the economic landscape in the coming months. The interplay of these factors highlights the intricate relationship between corporate health and macroeconomic stability, making it imperative for stakeholders to remain vigilant and informed.