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Positive UK economic data lifts FTSE 100

May 10, 2024

Key points

  • The FTSE 100 opens higher following stronger-than-expected UK GDP figures.
  • Positive economic data sparks a cautious optimism in market forecasts, influencing company strategies and investor outlooks.

The FTSE 100 is experiencing an upswing, buoyed by the UK’s latest GDP data which surpassed expectations, indicating a recovery from a recent recession.

Candle chart for the FTSE CFD, UK100ft, experiencing an upswing on the VT Markets trading app.

SEE: The FTSE CFD, UK100ft, experiencing an upswing on the VT Markets trading app.

The UK’s GDP for the first quarter was reported at 0.6%, higher than the market’s anticipated 0.4%. This uplift in economic indicators has injected optimism into the market, reflecting a potentially stabilising economic environment.

UK economic data for May 2024

S4 Capital experienced a downturn in revenue for the first quarter, attributing the decline to caution among its technology clients. Despite this, the company has reiterated its targets for the full year, suggesting a measured confidence in its long-term strategy.

International Consolidated Airlines Group (IAG) reported a rise in operating profit and is well-positioned for the summer season, bolstered by strong demand. This positive outlook may reinforce investor confidence in the travel and tourism sector’s recovery post-pandemic.

Rightmove adjusted its full-year guidance for a key revenue figure downward yet improved its customer-growth outlook. The company remains positive about signs of improvement in the UK housing market, which could influence real estate and related sectors.

Mothercare is exploring funding alternatives and has initiated refinancing discussions due to challenges posed by excess inventory and high interest rates impacting sales. A reflection of reality, this move underscores the broader retail sector’s ongoing adjustments to changing market conditions.

Market and economic insights for May

The recent GDP growth not only supports a more optimistic view of the UK’s economic recovery but also influences the Bank of England’s monetary policy decisions.

Although the central bank has decided to maintain its key rate, the robust GDP growth could give policymakers pause, suggesting they might not rush to implement rate cuts. Future rate decisions will likely hinge on forthcoming inflation and labour-market data, which remain critical determinants of the UK’s monetary policy trajectory.

The adjustments in consensus estimates for IAG following its earnings beat, which could continue to support the share price rally.

The robust GDP growth has also led to the speculation that the Bank of England may delay rate cuts, although the central bank is expected to proceed with them later in the year, driven by other economic indicators.

As the UK economy shows signs of recovery and companies adjust their strategies in response to evolving economic conditions, now is a prime time for investors to engage with the market.

With the FTSE 100 poised for growth and various sectors experiencing shifts influenced by recent economic data, strategic opportunities abound for informed trading.

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