- FTSE 100 extends gains
- UK GDP up 0.6% in Q1, strongest in G7
- Gilt yields ease slightly, Wes Streeting mulls leadership challenge
- US futures rise after tech rally propels fresh highs
- Brent Crude inches up to around $106 per barrel
Derren Nathan, head of equity research, Hargreaves Lansdown:
“The FTSE 100 has opened up a fraction, with investors choosing to take their cues from the economy and global markets rather than domestic politics. Mining stocks led the way to a small gain in the index yesterday reflecting broad strength in both industrial and precious metals.
The initial ONS estimate for first quarter UK GDP has come in better than expected rising 0.6% (consensus 0.5%) compared to the upwardly revised fourth quarter of 2025. That’s the strongest print out of the G7 nations so far with only Japan left to report (consensus 0.4%). The growth was broad based with services leading the way at 0.8% followed by construction at 0.4% and production at 0.2%. But there were some pockets of weakness with administrative and support services falling 1% partly reflecting a weaker outturn from employment agencies as the jobs market slowed.
Stronger than expected economic growth is usually a win for Downing Street in terms of tax revenues. But the period captures just one month of the Iran Conflict and higher oil prices and growth’s expected to slow this quarter. In isolation this data would likely favour the hawks and exert some pressure onto short term gilt prices.
Gilt traders will likely be paying closer attention to the political landscape today, with speculation building that Health Secretary Wes Sterling is soon to launch a challenge to Prime Minister Kier Starmer’s leadership. Angela Rayner has also revealed this morning that she has been cleared of wrongdoing in her tax affairs, paving the way for her own leadership bid. There are rumours swirling around Ed Miliband and Andy Burnham. All this uncertainty, given that most of the candidates would stand on a ‘higher spending’ left leaning platform, means that investors might well continue to demand higher yields.
Fresh records are in sight for Wall Street today after tech stocks propelled both the NASDAQ and S&P 500 to new highs yesterday. NVIDIA boss Jensen Huang’s attendance on the US State visit to China has raised hopes that restrictions on advanced tech exports to the People’s Republic will ease. However, the AI trade has blossomed well enough without such measures with NVIDIA expected to report 78% revenue growth to mammoth $78.5bn. Yesterday, a solid earnings beat by networking giant Cisco and bullish commentary on the Alibaba earnings call suggested that demand for AI and the infrastructure that supports it is intensifying in both regions.
After a pull-back yesterday Brent Crude is up slightly this morning to around $106 per barrel, more than 70% higher than where it was at the beginning of the year. The International Energy Agency has warned that a significant supply deficit till October even if the Iran conflict comes to a swift end. Meanwhile the world’s largest producer Saudi Arabia disclosed that its output has slumped to the lowest level in over three decades. For now, equity markets are choosing to focus on strength elsewhere. However, the cocktail of risks and opportunities facing businesses today means that both sector and individual company performance within those sectors is subject to wide disparity, meaning those brave enough to favour active over passive selection can drive significant outperformance if they do their homework.”
Parties related to the author hold shares in NVIDIA
