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London open: FTSE gains as UK exits recession
London stocks rose in early trade on Friday as data revealed the UK is no longer in recession.
At 0820 BST, the FTSE 100 was up 0.4% at 8,412.99, while sterling was 0.1% firmer versus the dollar at 1.2532.
Figures released earlier by the Office for National Statistics showed that GDP grew by 0.6% in the first quarter of this year, ahead of expectations for 0.4% growth.
This means the UK is no longer in recession following two consecutive quarters of declines at the end of last year, when GDP shrank by 0.1% in the third quarter and 0.3% in the fourth.
Output in the services sector grew 0.7%, while production sector output grew 0.8% and the construction sector saw a 0.9% fall.
ONS director of economic statistics Liz McKeown said: “After two quarters of contraction, the UK economy returned to positive growth in the first three months of this year.
“There was broad-based strength across the service industries with retail, public transport and haulage, and health all performing well. Car manufacturers also had a good quarter. These were only a little offset by another weak quarter for construction.
“In the month of March the economy grew robustly led, again, by services with wholesalers, the health sector and hospitality all doing well.”
Ruth Gregory, deputy chief UK economist at Capital Economics, said: “The 0.6% q/q rise in GDP in Q1 confirmed that the recession ended at the start of this year and lends support to our view that the recovery will be stronger than most forecasters anticipate.
“Even so, at this stage we doubt the recovery will be strong enough to prevent inflation from falling further and the Bank from cutting rates to 3.00% next year.”
In equity markets, British Airways and Iberia owner IAG flew a little higher as it said it was “well positioned” for the summer after posting a huge rise in first quarter profit on the back of strong leisure travel demand, especially over the Easter holidays.
Operating profit before exceptional items in the three months to March 31 surged to €68m from €9m a year earlier. Passenger capacity grew 7% over the period.
Property portal Rightmove was under the cosh, however, as it reiterated its revenue and profit guidance for the full year, but upgraded its customer growth expectations after a strong start to the year.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Crh Plc | +4.00% | +258.00 | 6,702.00 |
| 2 |  |
Tui Ag | +3.33% | +19.00 | 589.50 |
| 3 |  |
Glencore Plc | +2.46% | +11.40 | 474.95 |
| 4 |  |
Vodafone Group Plc | +2.26% | +1.54 | 69.62 |
| 5 |  |
Easyjet Plc | +2.14% | +11.20 | 534.00 |
| 6 |  |
Antofagasta Plc | +2.06% | +46.00 | 2,276.00 |
| 7 |  |
Berkeley Group Holdings (the) Plc | +2.03% | +105.00 | 5,270.00 |
| 8 |  |
Persimmon Plc | +1.99% | +28.00 | 1,434.50 |
| 9 |  |
Spirax-sarco Engineering Plc | +1.93% | +175.00 | 9,260.00 |
| 10 |  |
Standard Chartered Plc | +1.88% | +14.20 | 769.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rightmove Plc | -5.13% | -29.40 | 543.40 |
| 2 |  |
Sage Group Plc | -0.58% | -7.00 | 1,199.00 |
| 3 |  |
Auto Trader Group Plc | -0.53% | -4.00 | 744.20 |
| 4 |  |
Smurfit Kappa Group Plc | -0.48% | -18.00 | 3,748.00 |
| 5 |  |
Pearson Plc | -0.42% | -4.20 | 995.80 |
| 6 |  |
British Land Company Plc | -0.39% | -1.60 | 413.60 |
| 7 |  |
Mondi Plc | -0.38% | -6.00 | 1,580.00 |
| 8 |  |
Coca-cola Hbc Ag | -0.15% | -4.00 | 2,726.00 |
| 9 |  |
Diageo Plc | -0.07% | -2.00 | 2,835.00 |
| 10 |  |
Nmc Health Plc | -0.00% | -0.00 | 938.40 |
US close: Stocks rise as jobless claims top forecasts
Wall Street saw gains in its major indices as the closing bell rang on Thursday, with investors closely monitoring the latest jobless claims figures from the Labor Department.
The Dow Jones Industrial Average climbed by 0.85%, closing at 39,387.76, while the S&P 500 posted gains of 0.51% to reach 5,214.08, and the Nasdaq Composite managed a more modest increase of 0.27% to 16,346.26.
In currency markets, the dollar was last down 0.2% on sterling to trade at 79.85p, while it slipped 0.32% against the common currency to 92.74 euro cents.
Against the Japanese yen, the greenback dipped marginally, down 0.05% to last change hands at JPY 155.46.
“Today’s US initial jobless claims report is softer than expected for the first time in a while, marking the weakest weekly print in eight months,” said Ryan Brandham at Validus Risk Management.
“After a period of remarkable strength and resilience, signs are growing that the US labour market may be starting to soften.”
Brandham noted that last Friday also saw a weaker-than-expected US employment report.
“If the US labour market is softening, it should help the Fed in the fight against inflation, even if it is hoping to tame inflation without materially impacting the labour market.
“It’s expected that US yields move lower in response to today’s report.”
Jobless claims top forecasts for the first time in four weeks
In economic news, the Department of Labor indeed revealed that Americans filed for unemployment benefits at a brisk pace in the week ended 4 May, reaching a nine-month high.
Initial jobless claims rose by 22,000 to 231,000, surpassing market projections of 210,000 and marking the highest level since August 2023.
The unexpected uptick halted a streak of four consecutive weeks of lower-than-expected claims, signalling a weakening in the labour market.
The four-week moving average, designed to smooth out volatility, rose by 4,750 to 215,000, while continuing claims saw an increase of 17,000 to 1.78 million.
On a non-seasonally adjusted basis, claims climbed by 19,690 to 209,324, with notable spikes observed in states such as New York, California, Indiana, and Illinois.
Across the Atlantic, the Bank of England opted to maintain its benchmark interest rate at 5.25% during its meeting earlier, aligning with widespread expectations.
However, the central bank hinted at potential future rate cuts.
The decision marked the sixth consecutive meeting in which the Bank held rates steady, despite recent data from the Office for National Statistics indicating a moderation in consumer price inflation.
In March, the inflation rate eased to 3.2% in March from 3.4% in February, following a peak of 11.1% in October 2022.
The Monetary Policy Committee voted 7-2 in favour of maintaining the status quo, with members Swati Dhingra and Dave Ramsden advocating for a rate reduction to 5%.
That contrasted with the March meeting, where the MPC voted 8-1 to keep rates unchanged, with only Dhingra advocating for a cut.
Airbnb and Robinhood in the red, Warner Bros manages gains
In equity markets, Airbnb slid 6.87% despite reporting better-than-expected first quarter results in both revenue and earnings, as weak guidance overshadowed its performance.
Robinhood Markets dropped 3.08% even after it exceeded analysts’ expectations for earnings and revenue in the first quarter.
On the upside, Warner Bros Discovery advanced 3.08% despite falling short of expectations for both revenue and earnings in the first quarter.
Friday newspaper round-up: Tata, Post Office, John Lewis, KPMG
Members of a steelworkers’ union have voted to take industrial action in protest at planned job losses at Tata. The company last month rejected a plan by unions to keep open a blast furnace at the Port Talbot steelworks, ending hopes of avoiding as many as 2,800 job losses. – Guardian
A barrister who advised the Post Office to stop prosecuting branch owner-operators told a public inquiry he was “now sure” that the state-owned company “must have deceived” him because it failed to provide him with “highly relevant material”. Simon Clarke, who worked for the law firm Cartwright King when it was advising the Post Office, was being questioned on Thursday as part of the judge-led hearings looking into the Horizon IT scandal. – Guardian
John Lewis has shed 3,800 jobs over the past year, as it races to cut costs across its stores. New filings reveal the number of staff working for the John Lewis Partnership, which runs department stores and Waitrose supermarkets, dropped to 70,500 at the end of January, compared to 74,300 a year earlier. This coincided with the company saving around £26m in employment costs over the year. – Telegraph
KPMG missed multiple red flags in the run-up to the 2018 collapse of Carillion, with auditors at the Big Four firm joking to each other that their work was “more Mills & Boon than Shakespeare”, a report by the City watchdog has concluded. The Financial Reporting Council hit the company with a record £21 million fine last October for what it called “textbook” failures when signing off the construction and facilities outsourcer’s accounts. – The Times
Thousands of international travellers who used to visit the UK for VAT-free shopping have turned to luxury retailers in Paris and Milan after the British government scrapped the tax incentive in 2021. New research has found that 162,000 visitors from non-EU countries sought VAT refunds in the UK in 2019. Now 20 per cent of those tourists are claiming tax rebates in EU countries which still have shopping schemes. – The Times
