The FTSE 100 index made steady gains on Thursday, closing up 30.41 points, or 0.3%, at 10,589.99, driven by a combination of stronger-than-anticipated UK economic growth figures, positive corporate updates, and record highs on Wall Street. The FTSE 250 also advanced, ending 113.91 points higher, or 0.5%, at 22,779.50, while the AIM All-Share rose 1.84 points, or 0.2%, to 797.86.
UK Economic Growth Exceeds Expectations
In the UK, monthly GDP grew by 0.5% in February, following a revised growth of 0.1% in January, which was previously reported as showing no growth. This figure comfortably surpassed the consensus estimate of 0.1%, indicating stronger services and production output. Deutsche Bank chief UK economist Sanjay Raja noted that the data "smashed expectations," suggesting the UK entered the energy shock caused by the Middle East crisis from a more robust position than many had anticipated.
However, Raja warned that this upward momentum is unlikely to persist. "Households will have already started to feel the impact of the Iran energy shock, impacting disposable incomes and discretionary spending. Pump prices are up over 20% since the oil shock occurred. And dual fuel bills are due to rise by a similar amount over the summer," he explained. "As such, expect more sluggish growth into Q2-26 and beyond," he cautioned.
Bank of England's Cautious Stance on Rates
The positive economic news came after Bank of England governor Andrew Bailey stated that policymakers will not rush to hike interest rates in response to the ongoing energy crisis. Speaking at the International Monetary Fund spring meeting in Washington DC, Bailey told the BBC that the BoE faces a "very, very difficult" decision on rates at its upcoming meeting on April 30.
"There's really difficult judgments to be made. We're not going to rush to judgments on those things, because there are a lot of uncertainties around this, not just how it's going to play out, but also how it's going to pass through into the UK economy," Bailey said.
Global Market Movements
In European equities, the Cac 40 in Paris ended flat, while the Dax 40 in Frankfurt rose 0.4%. In New York, markets were higher, with the Dow Jones Industrial Average up 0.1%, the S&P 500 0.3% higher, and the Nasdaq Composite advancing 0.4%. The S&P and Nasdaq Composite hit further record highs, spurred by hopes around a potential breakthrough in US-Iran talks.
Joshua Mahony of Scope Markets commented, "The notion that valuations should be higher than the beginning of this crisis despite the huge disruptions and risks seems somewhat unbelievable, however this is certainly a very uneven rally indeed."
Oil prices resumed their upward trajectory despite hopes for a resolution to the crisis. Brent crude traded higher at $98.39 a barrel on Thursday afternoon, compared to $95.40 at the close of London equities on Wednesday. US defence secretary Pete Hegseth warned that the US will blockade Iranian ports for "as long as it takes," threatening renewed strikes if Tehran does not make a deal.
In bond markets, the yield on the US 10-year Treasury was unchanged at 4.29%, while the yield on the US 30-year Treasury widened to 4.91% from 4.89%. The pound ebbed to $1.3532 from $1.3577 against the dollar, and was lower at €1.1489 from €1.1502 against the euro.
Notable Corporate Performances
On the FTSE 100, Intertek soared 9.0% after confirming it had rejected an unsolicited bid of 5,150 pence per share from EQT Fund Management Sarl, which would value the company at around £8 billion. Intertek stated the proposal "fundamentally undervalues" it and its future prospects. The stock has risen by more than a quarter in the last week following news of a strategic review.
Ladbrokes owner Entain jumped 6.0% as it backed its annual guidance, citing "strong momentum" with revenue in the UK & Ireland and Australia segments beating expectations. Retail giant Tesco gained 4.7% after annual profit topped forecasts and it raised free cash flow guidance. Pretax profit for the year to February 28 grew 8.5% to £2.4 billion, with adjusted operating profit edging up to £3.15 billion, ahead of consensus.
Shore Capital analyst Clive Black praised Tesco for delivering "an authoritative, disciplined, and statesmanlike year underpinned by outstanding operational execution." BP firmed 3.9%, supported by rising oil prices and an upgrade to "buy" by UBS, which highlighted opportunities in cost savings and growth.
FTSE 250 Highlights and Decliners
On the FTSE 250, Morgan Sindall leapt 7.5% after raising its profit outlook for 2026 for the second time in three months, citing strong trading activity. Animalcare Group surged 35% after accepting a £235.2 million takeover approach from Charterhouse Capital Partners.
However, budget airline easyJet nosedived 5.0% as it warned of a larger-than-expected loss due to higher fuel costs, projecting a headline pretax loss between £540 million and £560 million for the six months to March.
Gold traded at $4,802.13 an ounce, little changed from the previous day. The biggest risers on the FTSE 100 included Intertek, Entain, Halma, Tesco, and Sage Group, while the biggest fallers were Antofagasta, Airtel Africa, Rolls Royce, SSE, and Babcock International.
Looking ahead, Friday's global economic calendar features eurozone trade figures, with a trading statement expected from discoverIE Group on the local corporate calendar.
