UK shares hit all-time high on stronger-than-expected GDP data / Image Source: Adobe

London stocks were up at midday on Friday, on the back of an interest rate hold from the Bank of England and a better-than-expected gross domestic product reading from the Office for National Statistics.

The FTSE 100 index was up 66.70 points, 0.8%, at 8,448.05, after hitting a record high 8,455.77 earlier. The FTSE 250 was up 163.86 points, 0.8%, at 20,695.16, and the AIM All-Share was up 5.05 points, 0.6%, at 788.75.

The Cboe UK 100 was up 0.9% at 844.75, the Cboe UK 250 was up 0.9% at 17,973.70, and the Cboe Small Companies was up 0.3% at 16,089.25.

In European equities on Friday, the CAC 40 in Paris was up 0.9%, while the DAX 40 in Frankfurt was 0.7%.

‘The FTSE 100 is again in the ascendancy as the market hit new all-time highs on Friday. Given its international horizons, this has little to do with the UK’s better-than-expected GDP growth and is largely being driven by strength in the resources space where higher metals prices and the promise of M&A are helping to stoke share prices,’ said AJ Bell analyst Russ Mould.

‘The next key test of the index’s new-found vim and vigour will likely come next week in the form of US inflation figures. Investors have broadly accepted rate cuts won’t be as deep or come as soon as would have been anticipated at the start of the year. However, any signs inflation is proving much more stubborn than predicted would still represent a shock to the system for financial markets.’

US producer price inflation figures come out on Tuesday next week at 1330 BST, followed by consumer price inflation data at the same time on Wednesday next week.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.3%, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.4%.

At its May meeting, the Bank of England’s Monetary Policy Committee voted by a majority of 7 to 2 to maintain bank rate at 5.25%. Two members preferred to reduce the bank rate by 0.25 percentage points, to 5.00%.

Seven members, Bank of England Governor Andrew Bailey, Sarah Breeden, Ben Broadbent, Megan Greene, Jonathan Haskel, Catherine Mann and Huw Pill, voted in favour of the status quo.

Swati Dhingra and BoE Deputy Governor Dave Ramsden voted for a cut.

The UK economy grew ahead of expectations in March and in the first quarter of 2024, according to numbers on Friday.

According to the Office for National Statistics, UK gross domestic product rose by 0.4% in March from February, ahead of FXStreet cited consensus of 0.1% growth. UK GDP had expanded 0.2% on-month in February, according to revised data.

In the first quarter of 2024, GDP is estimated to have risen 0.6%, beating expectations of a 0.4% rise and following a 0.3% decline in the fourth quarter of 2023 and a 0.1% decline in the third quarter. Compared with the same quarter a year ago, GDP rose 0.2%.

‘The UK has charged out of what will go down in the history books as the shortest, shallowest recession on record. After months of floundering around a flatline, growth of 0.6% will give the UK economy a real confidence boost. Services and manufacturing have helped offset ongoing challenges being faced by the construction sector,’ said AJ Bell analyst Danni Hewson.

‘Falling inflation and rising wages have given households a bit more in the tank and they’ve upped their spend, something that will need to continue if the trajectory is to be maintained. Andrew Bailey painted a bucolic picture of a recovering economy which will be further boosted by any rate cut tailwinds. But the resilience being demonstrated by most sectors could be seen as a reason for MPC members to keep their finger on the pause button for a little while longer.’

Sterling was quoted at $1.2532 at midday on Friday, higher than $1.2511 at the London equities close on Thursday.

The euro traded at $1.0780 at midday on Friday, up from $1.0775 late Thursday. Against the yen, the dollar was quoted at JP¥155.74 versus JP¥155.61.

In the FTSE 100, miners were among the best performing stocks, with Glencore up 3.3%, Anglo American up 2.0% and Antofagasta up 1.9%.

Gold was quoted at $2,376.77 an ounce at midday on Friday, higher than $2,332.88 on Thursday.

British Airways owner IAG rose 0.6%, after it said revenue in the first quarter of 2024 rose to €6.43 billion from €5.89 billion a year earlier.

Operating profit multiplied to €68 million from €9 million, while pretax loss narrowed to €87 million from €121 million.

‘Our group benefits from the strength of our core markets - North Atlantic, South Atlantic and intra-Europe - and the performance of our brands. Investment across the group in transformation is delivering encouraging improvements in punctuality and customer experience at our airlines,’ said Chief Executive Officer Luis Gallego.

‘We are well-positioned for the summer. The high demand for travel is a continuing trend. IAG expects non-fuel costs to increase slightly in 2024, reflecting investment. Net debt on March 31 stood at €7.44 billion, down from €9.25 billion a year earlier.’

In the FTSE 250, TBC Bank rose 4.2%.

The Tbilisi, Georgia-based lender announced a share buyback programme of up to ₾75 million or £22.4 million, after it reported pretax profit in the first quarter of 2024 rose to ₾343.2 million, or £102.3 million, from ₾296.3 million a year earlier.

Total operating income rose to ₾618.0 million from ₾532.2 million, with net interest income up to ₾442.8 million from ₾366.8 million, net fee and commission income up to ₾104.3 million from ₾92.4 million, while other non-interest income ticked down to ₾70.8 million from ₾73.0 million.

TBC Bank’s total customer base at March 31 rose to 17.9 million from 13.3 million a year earlier.

Looking ahead, Chief Executive Officer Vakhtang Butskhrikidze commented: ‘I believe that the group is well positioned to build further on this strong start to the year and deliver excellent results for our shareholders in 2024, as well as ensuring we are on track to meet our strategic targets for next year.

Among London’s small-caps, TT Electronics lost 7.7%. In the four months ended April 30, the electronic component manufacturer said revenue falls 2% on an organic basis from a year earlier, but up 1% excluding the impact of pass-through revenues, which it said continue to reduce.

Looking ahead, Chief Executive Officer Peter France commented: ’Whilst there is continuing global macro-economic uncertainty, the outlook for our markets remains good. The significant orderbook coverage and our prompt actions across the business underpin the board’s confidence in an unchanged outlook for the year and the delivery of the 10% operating margin target.‘

On AIM in London, Polarean Imaging gained 36%. The medical imaging technology developer said it received its second de novo order for a new Xenon MRI system from the University of Alabama at Birmingham Hospital.

It expects to install the new system later this year and will collaborate ’closely‘ with the hospital team, as it does with its existing clinical sites, to develop a ’strong‘ Xenon MRI programme.

Polarean Imaging said this programme will support clinical imaging, NIH-funded research, and pharmaceutical-sponsored trials, aligning with Polarean’s commitment to advancing medical research and patient care.

Brent oil was trading at $84.42 a barrel at midday on Friday, higher than $83.62 late Thursday.

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Issue Date: 10 May 2024