Stocks finished higher in London on Thursday, as evidence of better-than-expected growth for the US economy offered hope against the threat of an impending recession.
The FTSE 100 index closed up 16.24 points, or 0.2% at 7,761.11 on Thursday. The FTSE 250 ended up 111.47 points, or 0.6%, at 19,915.51. The AIM All-Share closed up 4.63 points, or 0.5%, at 865.41.
The Cboe UK 100 ended up 0.2% at 775.94, the Cboe UK 250 closed up 0.5% at 17,366.06, and the Cboe Small Companies ended up 0.3% at 13,622.40.
The US economy continued to grow in the final three months of 2022, at a pace slightly above expectations, according to a first estimate from the US Bureau of Economic Analysis.
The bureau’s first estimate of fourth-quarter gross domestic product was 2.9% annual growth. Economists had expected an annualised growth rate of 2.8% in the last quarter of 2022, according to market consensus cited by FXStreet.
For many, the data indicated that there may be a softer landing ahead for the world’s largest economy. It also comes ahead of a two-day Federal Open Market Committee meeting starting on Tuesday next week.
Markets are expecting the US Federal Reserve to downshift to a 25 basis point hike.
The pound was quoted at $1.2363 at the London equities close on Thursday, up from $1.2354 at the close on Wednesday. The euro stood at $1.0862, a touch lower against $1.0886 at the same time on Wednesday.
Against the yen, the dollar was trading at JP¥130.40 late Thursday, higher compared to JP¥129.78 late Wednesday.
Stocks in New York were broadly higher at the London equities close, with the Dow Jones Industrial Average flat, the S&P 500 index up 0.3%, and the Nasdaq Composite up 0.6%.
In the FTSE 100, 3i Group jumped 9.1% after the firm said it is on track of ‘good growth’ this financial year, despite pressure in its consumer discretionary sector investees amid tough economic conditions.
3i Group, whose investments range from infrastructure to retail, said its diluted net asset value per share at the end of its third quarter on December 31 grew 12% to 1,649p from 1,477p at the end of September.
3i Group was the best blue-chip performer at the close on Thursday. Meanwhile, Diageo finished the day as the FTSE 100’s worst performer, closing down 5.6%.
The brewer and distiller reported a double-digit profit rise in the first half of its financial year, but cautioned that organic sales growth in many regions will moderate due to a strong comparative.
Diageo, which owns brands including Baileys, Tanqueray, and Smirnoff, said pretax profit in the six months to December 31 increased 12% to £3.06 billion versus £2.72 billion a year earlier. Net sales rose 18% year-on-year to £9.42 billion from £7.96 billion.
Looking ahead, it said it expects organic net sales growth in Europe to moderate in the second half of its current financial year to June 30. In the Asia Pacific, Latin America & Caribbean and Africa regions, it anticipates growth to slow due to ‘strong’ sales during financial 2022.
In the FTSE 250, Intermediate Capital rose 6.8% after the London-based asset manager said assets under management at December 31 increased by 8.8% to $74.5 billion from $68.5 billion at September 30.
Fee-earning AuM was $60.9 billion, increasing 6.3% from $57.3 billion at September 30.
Tate & Lyle finished 6.1% higher after the sweetener and food ingredients supplier backed its outlook for the financial year ending March 31, as it reported revenue had risen by 16% in the three months to December 31.
Wizz Air dropped 7.2% after the low-cost airline admitted that, despite a rise in passenger numbers and revenue in its third-quarter, it still expects to make an annual loss.
It made a €642.5 million net loss in financial 2022, widened from €576.0 million the previous year. Its last net profit was the €201.1 million achieved in financial 2020.
Wizz Air added it was ‘confident’ the next financial year will be profitable.
Elsewhere in London, Provident Financial finished up 3.4%. The banking group announced that its chief executive officer, Malcolm Le May, is to step down, and noted its fourth quarter trading remains in line with market expectations, with net lending particularly strong as credit issued and customer acquisition volumes increased ‘significantly’ year-on-year.
Le May will be replaced by Ian McLaughlin, who Provident Financial describes as a highly experienced banking CEO, with a strong track record of delivering growth.
In addition, Provident Financial said it plans to change its name to Vanquis Banking Group PLC from March, in recognition of its new and future mix of lending products and its repositioning as a specialist banking group.
In European equities on Thursday, the CAC 40 in Paris ended up 0.7%, while the DAX 40 in Frankfurt ended 0.3% higher.
Brent oil was quoted at $87.35 a barrel at the London equities close on Thursday, up from $86.11 late Wednesday. Gold was quoted at $1,925,42an ounce, sharply lower against $1,933.82 at the close on Wednesday.
In Friday’s UK corporate calendar, there are trading statements from YouGov and Paragon Banking Group.
In the economic calendar, financial markets in Shanghai will remain closed as the Chinese New Year public holiday continues. Markets in Hong Kong will be open.
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