The FTSE 100 (^FTSE) and European stocks were higher on Thursday, with Wall Street following along, as the US economy grew faster than expected in the last three months of last year.
US gross domestic product (GDP) rose 3.4% in the final quarter compared to the same quarter a year earlier, according to the final estimate by the Bureau of Economic Analysis (BEA).
This was up from the 3.2% measured in the second reading. The BEA said the faster growth was thanks to upward revisions to consumer spending and non-residential fixed investment.
It came as official figures confirmed that the UK fell into a recession in the second half of 2023.
According to the Office for National Statistics (ONS), gross domestic product fell by 0.3% in the last three months of 2023, giving two consecutive falls after a decrease of 0.1% in the previous quarter. It was a sharper fall than economists were expecting.
Pierre Veyret, technical analyst at ActivTrades, said: “Equities traded slightly higher in Europe on Thursday. Benchmarks are still hovering around record levels, and market optimism remains high. Investors continue to bet on upcoming rate cuts from central banks around the world, and this confidence is clearly reflected in the market at the moment.”
“The recent dovish hints provided by ECB and FED officials, combined with a reassuring inflation trend, is what is driving market sentiment at the moment.”
“Even if some indices are already trading in uncharted territory, it seems that no one wants to exit the bullish train, driven by a fear of missing out on the rally.”
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JD Sports maintains profit guidance
File photo dated 26/12/2020 of the doors to JD Sports at Greenwich Peninsular, south London. JD Sports has warned that less innovation in the products it sells has made its trading (Steve Paston, PA Images) JD Sports has revealed sales growth for the full year at 8.4%, slightly ahead of what was guided in its January update, and what consensus was expecting.
However, it warned that trading remained “challenging” as retailers increase promotional sales.
Shares at the sportswear retailer climbed on the back of the trading update as it hiked its profit guidance.
It now expects profits to be in line with its previous guidance of between £915m and £935m before tax and adjusted items in the year to early February. It had previously downgraded its outlook in January.
Chief executive Regis Schultz said:
Looking ahead, the current trading environment remains challenging due to less product innovation and elevated promotional activity, especially online.
We anticipate trading conditions will improve as we move through the year, helped by a busy sporting summer and softer comparatives with last year.
The company opened 215 new JD shops in the year to early February, and added that the launch of a new UK loyalty programme had been “encouraging,” attracting 800,000 downloads so far.
Jeremy Hunt on UK recession
London, England, UK. 24th Mar, 2024. Chancellor of the Exchequer JEREMY HUNT is seen in Westminster as he appears on Sunday political shows. (Credit Image: © Tayfun Salci/ZUMA Press Wire) EDITORIAL USAGE ONLY! Not for Commercial USAGE! Credit: ZUMA Press, Inc./Alamy Live News (ZUMA Press, ZUMA Press, Inc.) Chancellor Jeremy Hunt said:
“Last year was tough as interest rates had to rise to bring down inflation, but we can see our plan is working. Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row.
“Our cuts to National Insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket.”
He later said:
“I don’t think any of us were expecting the economy to actually grow last year. The Bank of England wasn’t, the Office for Budget Responsibility wasn’t.
“In fact it did, albeit at a very slow rate. And that is a testament to the resilience of the economy but also the fact the government took some very difficult decisions early on to make sure we got the economy back on track.”
It comes as the most recent numbers for January 2024 show that the UK economy picked up, raising hopes it could be on its way out of recession.
The economy grew by 0.2%, official figures show, boosted by sales in shops and online and more construction activity. This is an early estimate, but signals how the UK is faring.
Watch: What is a recession and how do we spot one?
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