The FTSE 100 edged higher on Thursday as stronger-than-expected UK economic growth figures provided support for London equities, despite weakness in global technology stocks, higher US inflation and continued tensions in the Middle East.
London’s benchmark index gained 0.06% by 08:25 BST, while European markets recorded mixed performances. France’s CAC 40 advanced 0.05%, while Germany’s DAX declined 0.40%.
Sterling strengthened against the US dollar, rising 0.44% to $1.3250 following the release of UK economic data that exceeded market expectations.
UK Economy Grows 0.1% in August
Figures published by the Office for National Statistics showed that the UK economy expanded by 0.1% in August, compared with economists’ expectations for a 0.1% contraction.
Growth over the three months to August reached 0.7%, exceeding forecasts of 0.5%, while annual economic growth stood at 2.1%.
The figures provided an indication of economic activity ahead of the government’s forthcoming Budget, as policymakers assess the outlook for growth, public finances and inflation.
ONS economic statistics director Liz McKeown identified computer programming as the largest contributor to growth over the three-month period.
The stronger-than-expected figures coincided with an increase in sterling, although the FTSE 100’s advance remained limited amid broader international market uncertainty.
US Inflation Adds to Interest Rate Concerns
Global equity markets remained under pressure following the release of US consumer inflation figures that exceeded expectations.
US core consumer price inflation increased by 0.3% in September, compared with forecasts for a 0.2% rise.
The data contributed to concerns that persistent inflation could influence the Federal Reserve’s future interest rate decisions, including the possibility of further monetary tightening.
Technology shares were particularly affected by the wider market sell-off, with weakness in Asian semiconductor stocks adding to pressure on international equities.
The inflation figures also provided a contrasting backdrop to the stronger UK economic data, leaving European stock markets mixed during early trading.
Strait of Hormuz Disruption Continues Amid Middle East Conflict
Developments in the Middle East remained a focus for commodity and financial markets as attacks on commercial shipping continued near the Strait of Hormuz.
Two vessels reportedly sank near the strategic shipping route, while maritime security incidents disrupted commercial traffic.
The United Kingdom Maritime Trade Operations organisation recorded 15 attacks between 6 October and 14 October, the highest reported frequency since the conflict began in February.
Shipping data from Kpler indicated that approximately 2.9 million barrels of oil passed through the Strait of Hormuz on 11 October, compared with nearly 20.8 million barrels on 8 October.
Iranian Parliament Speaker Mohammad Bagher Ghalibaf said Tehran did not seek an indefinite conflict or prolonged negotiations with the United States but would continue military operations until its demands were met.
US President Donald Trump, speaking at a rally in Bullhead City, Arizona, claimed that Washington had established control over the strait and suggested that the conflict could end soon.
US Central Command has also stated that American forces control the waterway, while Iran has accused Washington of imposing a blockade on its ports.
Separately, attacks attributed to Houthi forces have affected airports in Saudi Arabia.
The International Monetary Fund warned that Gulf economies were unlikely to return quickly to their economic trajectories before the conflict.
The competing claims and continuing disruptions have contributed to uncertainty over regional security and energy transportation.
Oil Prices Decline While Gold Advances
Oil prices moved lower during Thursday’s trading despite the continuing disruption to shipping in the Middle East.
Brent crude futures declined 1.83% to $104.07 per barrel, while West Texas Intermediate crude fell 1.24% to $93.91 per barrel.
Precious metals moved in the opposite direction, with gold futures rising 1.38% to $4,164.80 an ounce.
Spot gold increased 0.93% to $4,143.26 an ounce as investors assessed inflation developments, geopolitical risks and the outlook for monetary policy.
The contrasting movements in oil and gold reflected differing trading conditions across commodity markets during the session.
UK Corporate News
TotalEnergies (LSE:TTE) said it expects its third-quarter refining margin to increase to $33.20 per barrel, compared with $8.40 in the corresponding period last year. The energy group attributed the improvement to changes in global energy supply conditions associated with the conflict involving Iran.
Jupiter Fund Management (LSE:JUP) reported third-quarter net inflows of £700 million, compared with £300 million a year earlier. Assets under management increased 51% to a record £75.9 billion.
Travis Perkins (LSE:TPK) reported a 1.3% decline in third-quarter like-for-like sales, reflecting subdued construction activity and weaker consumer demand. The building materials distributor continues to operate against a challenging backdrop in the UK construction market.
British Land (LSE:BLND) said it expects first-half underlying profit and rental income to increase, supported by demand for London office space and retail parks, alongside cost savings. The property group indicated that these factors were helping offset higher interest costs and reduced lease surrender premiums.
Dunelm (LSE:DNLM) reported a 1.1% increase in first-quarter sales to £433 million and maintained its full-year profit outlook. However, the home furnishings retailer warned that first-half profit was expected to decline compared with the corresponding period last year.
The FTSE 100’s modest advance followed a combination of stronger domestic economic data and company-specific trading updates, while US inflation, weakness in technology stocks and developments in the Middle East continued to influence market sentiment.
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