On Friday's market close, Britain's FTSE 100 demonstrated a notable gain of 1.05%, showcasing resilience despite an unexpected decline in the economy at the start of the year, primarily attributed to a decrease in production output. Data released from the Office for National Statistics revealed that the UK’s gross domestic product (GDP) contracted by 0.1% in January.
This figure starkly contrasts with the previous month’s growth of 0.4% and falls short of the consensus estimate that anticipated a 0.1% increase. However, ING analysts cautioned that such weakness in January shouldn’t overshadow an otherwise positive outlook for UK growth throughout the coming year.
They noted, 'The Treasury is dramatically boosting day-to-day spending this year, even if some of that will get pared back in the Spring Statement later this month.' They further remarked that with much of the spending boost directed towards wages, the consequences should clearly manifest in this year's GDP figures.
As for the Bank of England's forthcoming monetary policy decision set for March 20, ING indicated that the latest data is 'unlikely to have shifted the dial materially.' They highlighted the committee's cautious stance due to persistent wage growth and inflation within services. Currently, ING anticipates that the Bank will maintain its strategy of quarterly cuts, with expectations for moves in May, August, and November.
In the corporate sector, BP (British Petroleum) reported a 2.67% increase following media coverage detailing its intentions to sell a 50% stake in its solar unit, Lightsource bp. The firm expressed to MT Newswires their plan to engage a partner for the unit and commence a sale process 'in the near future,' although they refrained from providing further comments.
Conversely, Bodycote, another player in the UK market, faced a slump of 4.87% after announcing a decrease in attributable profit and revenue for the fiscal year 2024. Nonetheless, this heat treatment and thermal processing services company declared an increase in its final dividend for the year, suggesting a commitment to shareholder returns despite the recent challenges.
Observers will be keenly watching both economic indicators and corporate actions as they navigate the upcoming months in the UK market..