'Robust' GDP Data Helps Push Markets Higher
The downward revision of the US GDP estimate wasn't as bad as feared on Friday, providing some moderate impetus for global markets
The FTSE 100 index took on 45.7 points to close 0.9% ahead at 5,201.6 on Friday—the pick-up in momentum enabled the UK benchmark to recoup some of the week’s losses and close 0.1% firmer over the five-day period. The FTSE 250 index, which more closely represents the British economy, took on 101.2 points or 1.1% on Friday, ending the week 0.2% higher at 9,779.9.
Wall Street had achieved similar Friday gains by the time of the UK close, but European indices put in a firm but more muted performance in the absence of their own GDP impetus.
August's final Friday saw a minor upward revision to the second estimate of UK gross domestic product in the second quarter. The Office for National Statistics announced on Friday that the British economy expanded 1.2% quarter-on-quarter, rather than the 1.1% initially estimated, outstripping performances from both the Eurozone region as a whole and the United States. Across the pond, the latest estimate of US second-quarter GDP was revised down from the previous reading of 2.4%. The second estimate came in at 1.6% compared to forecasts for 1.4%. Wall Street also awaits a speech by Federal Reserve chairman Ben Bernanke in which he will offer his view of the state of the economic recovery and, it is hoped, provide clues as to the central bank’s intended policy direction. Investors have been increasingly jittery of late amid prospects of a double-dip recession as weak housing and jobs data appear to be indicating a faltering recovery.
Returning to the UK session, news flow was light on the ground ahead of the long August Bank Holiday weekend, enabling Cable & Wireless Worldwide to climb 5.7% higher as Moody's updated its ratings for Cable & Wireless Communications following the company’s demerger.
A number of defensive stocks were in play—a tell-tale sign that the market’s rise belied a more cautious investor sentiment, with Associated British Foods, Vodafone, National Grid and Centrica all featuring on the FTSE 100 leaderboard, each with a gain of between 1.9% and 4.3%.
Elsewhere, the sliding crude price weighed on oil & gas E&P companies BP and Tullow Oil, down 1.5% and 3.8%, respectively, though the latter was hard hit following press reports in Uganda that the local government has refused an extension of one of Tullow’s exploration licences.
