FTSE 100 closes on record high after UK economic growth better than expected

The FTSE 100 continued its weeks-long rally on Friday, closing at an all-time high amid better than expected gross domestic product (GDP) figures for the UK.

London’s blue-chip index closed 52.41 points higher, or 0.63%, at 8,433.76, with finance and industrial stocks among the biggest risers of the day.

Traders were riding high after the UK economy grew by 0.6% in the first quarter of this year, according to Office for National Statistics figures released on Friday morning.

The statistics mean the UK rebounded out of recession between January and March, after It comes after two quarters of decline in the back half of 2023.

It represented the strongest quarterly growth since the fourth quarter of 2021, and came in ahead of expectations.

A consensus of economists had predicted a 0.4% improvement for the latest quarter.

Chancellor Jeremy Hunt hailed the GDP statistics as “proof that the economy is returning to full health”.

But George Dibb, head of IPPR’s centre for economic justice, stressed it is “too early to say that the British economy has turned a corner”.

It caps off a week of gains for the index, which was also buoyed on Thursday after Bank of England kept interest rates at 5.25% for another month, but signalled that it was getting closer to being able to cut rates.

Matt Britzman, equity analyst at Hargreaves Lansdown, said: “It’s Friday afternoon, the sun’s out, and the FTSE 100 has closed at an all-time high – no this is not a dream.

“Investors are finally starting to look at UK businesses and see reasons to be optimistic.

“The Bank of England held rates steady earlier in the week but hinted at rate cuts to come.

“Meanwhile, economic growth came in better than expected, but crucially not too much better to drive up fears it could cause inflation to spike.

“This comes on the cusp of major UK banks reporting over the past couple of weeks, and there was a huge array of optimism from management teams around the outlook for the UK.

“Many will look at this run and assume it has no legs, UK investors have been beaten down too many times in the past.

“UK bulls will argue it’s been long overdue, with the market suffering from a hefty valuation discount to global peers for some time.

“Next week’s jobs and wages data will be key for momentum, markets will want to see continued signs that stickier elements of inflation are easing, or it’ll raise fresh questions about if and when rate cuts might come.”

Other top European stock markets also had a strong end to the week. Germany’s Dax rose 0.38%% while France’s Cac 40 closed up 0.33%%.

In the US, the S&P 500 was down about 0.01% and the Dow Jones was up 0.1% by the time European markets closed.

The pound dropped against the US dollar after the Bank’s interest rate decision on Thursday, and was down 0.026% at 1.252 dollars on Friday afternoon.

Sterling was up about 0.078% against the euro at 1.162.

In company news, British Airways-owner International Consolidated Airlines said its earnings soared in recent months thanks to higher sales and lower fuel costs.

IAG said it was continuing to see a rebound in leisure travel.

It reported an operating profit for the first three months of the year of 68 million euro (£58.5 million), up from the nine million euro (£7.7 million) reported this time last year.

IAG shares rose early on Friday, before slumping later in the afternoon to finish 0.88% down.

Meanwhile property portal Rightmove cut its forecast for the average revenue per advertiser (Arpa), a key metric.

Rightmove’s Arpa growth forecast fell to £75-85, down from £100-110.

The drop comes despite the company saying it expects improvements in the UK property market this year, forecasting that its customer numbers will grow slightly compared to 2023.

The update sent its shares 4.26% lower on Friday.

The biggest risers on the FTSE 100 were St James’s Place, up 14.8p to 484.8p, Spirax-Sarco, up 265p to 9350p, Glencore, up 12.45p to 476p, Standard Chartered, up 20.2p to 775p, and B&M European, up 13.2p to 548.2p.

The biggest fallers on the FTSE 100 were Rightmove, down 31.6p to 541.2p, Rolls-Royce, down 10.3p to 423.6p, Land Securities, down 12.5p to 668.5p, Unite Group, down 15.5p to 963p, and Ocado, down 5.5p to 348.3p.