Markets indicate UK economy half way to triple dip recession25/01/2013 - 15:21:42
Signs that the UK economy is half way to an unprecedented triple dip recession failed to reverse this week’s bullish mood on world markets.
UK gross domestic product (GDP) for the final three months of last year came in at a worse-than-expected 0.3%, but London’s FTSE 100 Index still added to gains of nearly 2% this week, up 11.4 points to 6276.2.
The Dow Jones Industrial Average also opened ahead after US new home sales figures posted their first annual gain since 2005.
Growing fears that Britain will be stripped of its gold-plated AAA rating pushed the pound down against the euro to 1.17, but it moved up against the US dollar at 1.58.
The disappointing GDP number, which is subject to revision, reinforced the view of some City commentators that the New Year share price rally is out of kilter with the current global economic uncertainty.
Rebecca O’Keeffe, head of investment at Interactive Investor, said there appeared to be nothing that could stand in the way of the rally, even figures this week showing Spain’s 26% unemployment rate and the continuing fall in the economic outlook in France.
She added: “Markets may continue to push higher, but complacency is now at dangerously high levels. Far from pricing in downside risks, markets appear to be ignoring them altogether.”
This week’s party mood has been fed by a spate of strong earnings reports on both sides of the Atlantic, and signs the world’s largest economy – the United States – is on the road to recovery.
Investors have also been encouraged by better-than-expected purchasing managers’ figures both in the US and the powerhouse Chinese economy.
Corporate updates were thin on the ground, but the FTSE 100 Index was driven to its highest level since May 2008 from improvements by oil giant Royal Dutch Shell, which climbed 35p to 2320.5p, and Vodafone after a rise of 1.2p to 169.8p.
But mining stocks were not immune from the bleak economic figures and were leading the fallers board today. Evraz lost 2% or 7.2p to 299.7, while Eurasian Natural Resources was down 7.7p to 331.5p.
In the FTSE 250 Index, which has outperformed its blue-chip rival over the last year, easyJet was one of the biggest risers as analysts continued to cheer the company’s better-than-expected winter trading update yesterday.
Shares were 5% higher last night and rose by another 5% today, a gain of 47.5p to 946p.
Pubs group Enterprise Inns led the second tier risers board – up 6% or 5.7p to 100.7p – ahead of its trading update next Thursday.
more stories like this:
- once per day, no spam.