12th Jun 2025 17:09
(Alliance News) - The FTSE 100 closed higher on Thursday, despite weak UK growth figures and renewed geopolitical tensions and tariff worries.
The FTSE 100 index closed up 20.57 points, 0.2%, at 8,884.92. The FTSE 250 ended down 41.85 points, 0.2%, at 21,386.69, and the AIM All-Share closed 2.95 points lower, 0.4%, at 765.88.
The Cboe UK 100 was up 0.1% at 885.21, the Cboe UK 250 was down 0.4% at 18,868.50, and the Cboe Small Companies was up 0.5% at 17,057.64.
The UK economy fell at a faster pace than expected in April, numbers on Thursday showed, as services output slumped.
According to the Office for National Statistics, the UK economy fell 0.3% in April from March. It had expanded 0.2% in March from February.
The reading for April fell short of expectations, as a smaller decline of 0.1% was expected, according to consensus cited by FXStreet.
Bank of America explained that services and manufacturing fell due to stamp duty changes, national insurance contribution increases and US tariffs.
"This is the first hard data we get with the tariff impact," BofA noted after the figures, which it said puts "small downside risks to our Q2 GDP forecast of 0.2%".
"While the hit to services from stamp duty changes should reverse, we think growth is likely to continue to be weighed down by US tariffs/NICs rise. The US/UK trade deal and US de-escalation with China cap severe downside risks to UK growth from tariffs, but growth is likely to be lower relative to pre-Liberation Day", BofA said.
But the broker expects quarterly growth to be positive as consumer spending pickup and October fiscal stimulus should act as tailwinds.
"Weaker growth, potential reversal of the erratic April inflation strength in May, slowing pay, looser labour market and potential disinflationary impact from tariffs can open the door for a doveish tilt from the BoE in the second half of the year," BofA added. "We continue to expect cuts in August, September and November."
Weighing on sentiment, another twist in the unpredictable US approach to trade.
US President Donald Trump on Wednesday said he would be sending letters within the next two weeks to other countries' governments to announce unilateral US levies on their exports to America.
"This is the deal, you can take it or leave it," Trump told reporters.
The return to trade belligerence eclipsed any optimism that had emerged from a putative agreement between the US and China on Tuesday to modestly de-escalate trade tensions.
Paul Donovan at UBS said while investors have become "conditioned to expect retreats from such threats," the uncertainty created "may weigh on US investment and hiring in the near term."
The comments, which followed a soft US CPI print on Wednesday, put the greenback under renewed pressure.
The pound was quoted higher at USD1.3586 at the time of the London equities close on Thursday, compared to USD1.3545 on Wednesday. The euro stood higher at USD1.1575 against USD1.1486. Against the yen, the dollar was trading at JPY143.71, down compared to JPY144.63.
In European equities on Thursday, the CAC 40 in Paris closed down 0.1%, slightly higher, while the DAX 40 in Frankfurt ended down 0.7%.
Stocks in New York were little changed. The Dow Jones Industrial Average was flat, the S&P 500 index was up 0.2%, and the Nasdaq Composite was 0.1% higher.
Data on Thursday showed US annual producer price inflation accelerated as expected last month, though prices rose at a slower pace than expected on a monthly basis.
According to the Bureau of Labor Statistics, US annual producer price inflation heated up to 2.6% in May, from 2.5% in April, in line with the FXStreet cited consensus.
Prices rose 0.1% in May from April, but were expected to increase by 0.2%. Prices had fallen 0.2% in April from March.
The yield on the US 10-year Treasury was quoted at 4.38%, narrowing from 4.44%. The yield on the US 30-year Treasury was quoted at 4.87%, narrowing from 4.93%.
On Wall Street, Boeing fell 4.9% after Air India flight 171, a Boeing 787-8 Dreamliner, crashed in the city of Ahmedabad shortly after takeoff.
The crash was the first ever for a Boeing 787 Dreamliner, a source familiar with the matter confirmed to AFP.
The crash saw airline share prices fall. British Airways owner, IAG, fell 3.2%, easyJet fell 3.8%, Deutsche Lufthansa fell 2.7% and Air France-KLM fell 7.3%.
Putting further pressure on airlines, a jump in oil prices raises the likelihood of higher fuel costs.
Brent oil was quoted higher at USD69.66 a barrel at the time of the London equities close on Thursday, from USD68.23 late Wednesday.
The oil price firmed following reports that Israel was poised to launch airstrikes on Iran, along with Trump saying he was now "less confident" that talks with Tehran would end up with it rolling back its nuclear programme.
The US is removing non-essential personnel and military dependents from the Middle East, after Iran warned it would target US military bases in the region if conflict broke out.
Iran, meanwhile, is doubling down, vowing to "significantly" boost uranium enrichment after the UN's nuclear watchdog said Tehran has breached its obligations.
The rise saw oil majors and index heavyweights BP and Shell climb 1.9% and 1.3% respectively.
Gold was quoted higher at USD3,388.71 an ounce against USD3,338.63.
On the FTSE 100, Tesco rose 1.6% after a well-received first-quarter trading update.
The Welwyn Garden City-based food retailer said sales in the 13 weeks to May 24 amounted to GBP16.38 billion, rising 5.3% on-year, or 5.5% at constant currency, and ahead of the Visible Alpha consensus of GBP16.1 billion.
Like-for-like sales were 4.6% higher annually, beating the Visible Alpha consensus of 3.9%, and accelerating from 4.0% growth in the fourth quarter of the prior financial year.
"We are pleased with our performance across the first quarter. Our continued commitment to delivering great value, quality and service for our customers has contributed to like-for-like sales growth across all parts of the group," Chief Executive Officer Ken Murphy said.
John Moore, wealth manager at RBC Brewin Dolphin, said: "It's been a strong start to the year for Tesco, helped by the good weather, with sales growth across each part of the group.
Halma advanced 3.3% after better-than-expected annual results.
The Amersham, England-based life-saving equipment maker posted pretax profit of GBP384.3 million for the financial year ended March 31, up 13% from GBP340.3 million a year prior.
Revenue rose 11% to GBP2.25 billion from GBP2.03 billion.
Adjusted earnings before interest and tax rose 15% to GBP486.3 million from GBP424.0 million a year ago. The adjusted Ebit margin improved to 21.6% from 20.8%.
Citi said sales were around 1% above consensus, adjusted Ebit was 2% above expectations, and adjusted Ebit margin was 20 basis points above forecast.
AJ Bell Investment Director Russ Mould said the "impressive" results confirmed Halma's status as "one of the unsung heroes of the London market.
The biggest risers on the FTSE 100 were Endeavour Mining, up 96.00p at 2,332p, Halma, up 100.00p at 3,120.00p, Hikma Pharmaceuticals, up 56.00p at 2,146.00p, BT Group, up 4.65p at 185.45p, and BP, up 7.10p, at 380.70p.
The biggest fallers on the FTSE 100 were easyJet, down 22.20p at 558.80p, JD Sports Fashion, down 3.02p at 77.30p, Intermediate Capital Group, down 71.00p at 1,971.00p, Mondi, down 42.50p at 1,184.00p, and IAG, down 10.70p at 328.50p.
There are no significant corporate events currently scheduled for Friday.
Friday's global economic calendar has CPI figures from France, Germany and Spain, the Michigan consumer sentiment index and eurozone industrial production figures.
By Jeremy Cutler, Alliance News reporter
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