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Wall Street loses ground as FTSE 100 closes higher on UK economy growth

A look at how the major markets are performing on Friday

A Trader reacts as a screen displays the Fed rate announcement on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., May 3, 2023.  REUTERS/Brendan McDermid
Wall Street in the red as traders eye the current debt ceiling standoff. Photo: Brendan McDermid/Reuters (Brendan McDermid / reuters)

The FTSE 100 and European stocks finished higher this Friday after data showed the UK economy returned to growth in the first quarter, while Wall Street's main stock indexes struggled for direction.

The FTSE 100 (^FTSE) rose 0.28% to close at 7,752 points, while the CAC 40 (^FCHI) in Paris climbed 0.29% to 7,403 points. In Germany, the DAX (^GDAXI) gained 0.47% to 15,909.

FTSE 100

The UK’s blue chip index bounced back after data showed that the UK economy grew in the first three months of 2023.

Gross domestic product grew 0.1% in the first three months of 2023 despite a contraction in March, according to the Office for National Statistics (ONS). The rise was in line with forecasts and came despite a fall of 0.3% in March.

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Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown said growth was "eked out despite strike activity which derailed some momentum".

"The data comes hot on the heels of changed forecasts from the Bank of England. Lower energy prices are expected to stop the UK economy from contracting compared to previous expectations," she added.

Read more: UK economy grows in first quarter but shrinks in March

Insurer Beazley (BEZ.L) jumped 3.07% after reporting a sharp jump in net premiums in the first quarter.

Pearson (PSON.L) rose 1.21% after brokerage Morgan Stanley turned bullish on the stock.

Shares in GSK (GSK.L) jumped 2.06% after a favourable Zantac ruling in Canada that saw a proposed class action made on behalf of users of a heartburn drug thrown out.

THG (THG.L) slumped 16.5% after the retailer said it had terminated talks with Apollo Global Management for a buyout deal.

US and Asia

Wall Street's main stock indexes were lower on Friday as the current debt ceiling standoff pushed consumer sentiment lower and sparked investor fears.

The Dow Jones (^DJI) lost 0.24% to 33,228 points. The S&P 500 (^GSPC) slipped 0.30% to 4,118 points and the tech-heavy NASDAQ (^IXIC) lost 0.42% to 12,277.

Ahead of the weekend, investors will continue to closely track updates on the ongoing debt ceiling negotiations, with a key meeting between president Joe Biden and House speaker Kevin McCarthy postponed until next week.

Both consumer and producer prices cooled a bit, while weekly jobless claims posted their sharpest rise in one and a half years. Data on consumer sentiment and import prices are due later in the day.

The University of Michigan's preliminary reading on the overall index of consumer sentiment is expected to come in at 63 this month, down from 63.5 in April.

Read more: Trending tickers: GSK | THG | Beazley | Disney

In Asia, markets were mostly lower, with academic and educational services stocks leading losses in mainland China.

Tokyo’s Nikkei 225 (^N225) gained 0.90% to 29,388 points, while the Hang Seng (^HSI) in Hong Kong lost 0.45% to 19,654 ahead of its first-quarter GDP figures. The Shanghai Composite (000001.SS) slipped 1.12% to 3,272 points, dragged lower by in academic and educational services stocks.

Pound

The pound’s (GBPUSD=X) touched $1.2490 on Monday, the lowest level since 3 May, as traders digested the latest GDP report.

Despite this, the pound has risen about 3.5% against the dollar so far this year and is up some 17% from lows hit in the wake of September's disastrous mini-budget.

The sterling (GBPEUR=X) gained ground against the euro and is now trading at €1.1468.

ING strategist Francesco Pesole said: "The Bank of England's 25-basis point rate hike did not have any major implications for sterling.

"The drop in cable yesterday was almost entirely due to the dollar rally and was in line with the move in other dollar crosses."

Oil markets

Meanwhile, Brent crude (BZ=F) slipped and was trading at around $74/barrel and is set for its fourth weekly decline, as renewed economic concerns in the United States and China revived anxieties about fuel demand growth in the world’s two largest oil consumers.

"Oil prices are lower after another round of Chinese data, this time money metrics, confirmed their economic reopening from COVID continues to disappoint," said Edward Moya, senior market analyst at data and analytics firm OANDA.

Watch: UK economy shrank 0.3% in March, ONS figures show

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