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Highlights
Wall Street momentum even as US economic data shows a sharper quarterly contraction
FTSE 100 and European equities supported by Middle East ceasefire developments
Bank of England projects moderated UK growth amid volatile GDP elements and trade shifts
Global equities maintained upward movement on Thursday, with Wall Street benchmarks showing resilience despite a deeper-than-expected contraction in the US economy. The FTSE 100, along with broader European indices, recorded gains following signs of easing geopolitical tensions in the Middle East and cautious signals from the Bank of England regarding UK economic activity.
The S&P 500 Index (ticker: ^GSPC) closed higher, reflecting broader market optimism. Investors responded to the revised data from the Bureau for Labour Statistics indicating that the US economy saw a steeper decline in the first quarter. While the initial figures hinted at only a marginal contraction, the latest update showed a wider dip, influenced by weakening consumer and business activity at the start of the year.
The Nasdaq Composite and Dow Jones Industrial Average also participated in the rally, supported by gains in the technology and industrial sectors. These movements occurred even as market participants digested implications of ongoing macroeconomic headwinds, including subdued domestic demand and external trade challenges.
FTSE 100 and Europe Rise on Middle East Developments
In London, the FTSE 100 tracked higher in alignment with its European counterparts such as the DAX (^GDAXI) and CAC 40 (^FCHI). Sentiment in European markets improved following a ceasefire between Iran and Israel, which eased concerns of further conflict in the region and its ramifications on global oil and energy supply.
Statements from US leadership during the NATO summit indicated ongoing diplomatic engagement with Iran, with talks scheduled in the upcoming week. The ceasefire, now in its second day, follows nearly two weeks of conflict that had previously rattled energy markets and contributed to volatility in commodity-linked assets.
The Hang Seng Index (^HSI), however, diverged from this trend, ending lower amid ongoing pressures in the Chinese property sector and tighter liquidity conditions in the region.
UK Growth Outlook Clouded by Volatility and Tax-Driven Activity
Bank of England Governor Andrew Bailey, speaking at an economic event hosted by the British Chambers of Commerce, shared insights into the UK’s current growth profile. Bailey noted that earlier-than-expected strength in the first quarter was largely driven by temporary factors, including heightened spending ahead of scheduled tax increases.
GDP metrics from April reflected a reversal of this short-term boost, with contraction observed in various sectors. Business investment, though elevated in the early part of the year, appears to be under pressure from rising uncertainty and weaker demand expectations. Enterprises surveyed have indicated a more cautious stance moving forward, potentially leading to a slowdown in capital expenditure in the coming periods.
Economic analysts also pointed to trade adjustments linked to anticipated tariffs on exports to the United States, contributing to the earlier surge in activity and subsequent pullback in the following month.
Global Sector Movements and Corporate Sentiment
The Nikkei 225 Index (^N225) posted gains, extending its upward trend driven by domestic earnings optimism and a supportive monetary stance from the Bank of Japan. Meanwhile, continental indices including the DAX (^GDAXI) benefited from easing geopolitical concerns and better-than-expected data from the eurozone services sector.
Global sentiment appears mixed as investors balance macroeconomic signals with regional developments. While corporate confidence remains under strain due to prevailing uncertainties, short-term stabilisation in conflict zones and continued central bank engagement have provided temporary relief to global markets.
