(Alliance News) – The FTSE 100 closed higher on Wednesday, as US markets fell after weak economic growth data.
The FTSE 100 index closed up 31.39 points, 0.4%, at 8,494.85. The FTSE 250 advanced 74.87 points, 0.4%, at 19,884.59, and the AIM All-Share gained 9.41 points, 1.4%, at 690.72.
The Cboe UK 100 ended slightly lower at 843.51, the Cboe UK 250 rose 0.3% at 17,388.66, while the Cboe Small Companies declined 0.3% at 15,278.59.
In Paris on Wednesday, the CAC 40 ended 0.4% higher, while Frankfurt’s DAX 40 rose 0.2%.
On Wall Street, at the time of the London close, the Dow Jones Industrial Average traded 0.7% lower, the S&P 500 fell 1.1%, while the Nasdaq Composite dropped 1.5%.
The US economy contracted in the first quarter of 2025 hit by surging imports in expectation of US President Donald Trump’s ‘liberation day’ trade tariffs at the start of April, as well as a decline in government spending.
According to an initial estimate from the Bureau of Economic Analysis on Wednesday, gross domestic product decreased at an annual rate of 0.3% in the first quarter of 2025, slowing from an annual rate of growth of 2.4% in the fourth quarter of 2024.
The decrease primarily reflected an increase in imports and a decrease in government spending. These movements were partly offset by increases in investment, consumer spending, and exports.
The slump was worse than the 0.4% GDP growth forecast by FXStreet-cited market consensus.
Earlier this week, figures from the US Census Bureau showed imports jumped by USD16.3 billion to USD342.7 billion in March.
In addition, the report showed the personal consumption expenditures price index increased 3.6% in the quarter, picking up speed from 2.4% in the fourth quarter.
Core PCE, which excludes food and energy prices, and is the Fed’s preferred inflation measure, increased by 3.5% in the quarter from 2.6% in the fourth quarter.
US private sector employment rose by much less than expected last month, according to numbers from payroll processor ADP on Wednesday.
Private sector employment increased by 62,000 jobs in April, marking a slowdown from the 147,000 jobs added in March, a figure which was revised from 155,000.
The figure came much below the FXStreet-cited consensus of 108,000 new jobs in March and comes ahead of Friday’s nonfarm payrolls report for April.
ING pointed out economic contraction and elevated inflation fuel the “stagflation narrative” and limit what the Federal Reserve can do to help as economic sentiment sours.
But the broker thinks when the Fed do “come to the rescue at some point in the third quarter we suspect they will move hard and fast and fully understand why markets are now pricing 100bp of interest rates cuts for the year versus 79bp this time last week.”
Looking ahead, Kallum Pickering at Peel Hunt explained while economic activity at the start of the year reflected adjustments to anticipated tariffs, the second quarter will reflect the actual impacts of the huge tariff-induced supply shock and a demand-side shock caused by falling confidence and rising uncertainty.
“A US recession is now a serious worry – we put a 35% risk on such an outcome. But while investment and consumption may be weak in [the second quarter], a partial reversal of the import surge could trigger a large rebound in net trade and hence the overall [second quarter] GDP outturn could be positive.”
Against the yen, the dollar was trading higher at JPY142.66 on Wednesday at the London equities close compared to JPY142.18 on Tuesday. The pound traded lower at USD1.3357 compared to USD1.3407 on Tuesday.
The euro stood lower at USD1.1365 on Wednesday against USD1.1400 on Tuesday.
In London, investors weighed a slew of earnings from a number of blue-chip heavyweights.
GSK gained 3.6% after reporting a more than 50% increase in profit in the first quarter of 2025, driven by rising sales in its Specialty Medicines division.
The London-based pharmaceutical maker said pretax profit was GBP2.11 billion in the three months that ended March 31, up 56% from GBP1.36 billion a year before, as sales rose by 2.1% to GBP7.52 billion from GBP7.36 billion. Sales were up 4% on-year at constant currency rates.
Core operating profit was GBP2.53 billion, up 4% on the year before. Core operating profit margin was 33.7%, up 0.5 percentage points. Core earnings per share were 44.9 pence, up 4%.
Lender Barclays closed down 1.0% despite broadly positive first quarter results.
The lender topped market expectations in the quarter, driven by a strong performance in its Investment Banking division which benefited from recent market volatility.
Barclays said pretax profit rose 19% to GBP2.72 billion in the first quarter from GBP2.28 billion a year prior, beating the GBP2.49 billion company-compiled consensus.
Total income rose 11% to GBP7.71 billion from GBP6.95 billion, well ahead of GBP7.29 billion consensus, driven by higher structural hedge income, higher income in Global Markets, particularly in fixed income, currencies, and commodities and at Tesco Bank.
Smith & Nephew climbed 5.8% as it said it made a good start to 2025 as revenue increased.
The Watford, England-based medical technology company said first-quarter revenue rose 1.6% to USD1.41 billion from USD1.39 billion, with underlying revenue growth of 3.1%.
Smith & Nephew said headwinds from China “remain an offsetting factor” but it believes it has passed their peak impact.
The company left its 2025 guidance unchanged, with expected revenue growth of 5.4%, and 5.0% underlying growth.
But Glencore tumbled 8.9% as it delivered copper production of 167,900 tonnes in the first quarter of 2025, down 30% from 239,700 tonnes a year earlier.
While copper had a slow start to the year, Glencore expects the first quarter to be the lowest quarter, and a significantly stronger performance is anticipated over the remainder of the year.
Also weighing on Glencore and the wider mining sector, data showing a slowdown in factory activity in China.
The purchasing managers’ index fell to 49.0 in April from 50.5 in March, according to the National Bureau of Statistics, the lowest reading since December 2023.
Along with Glencore, Antofagasta fell 3.6% and Anglo American 4.9%.
Brent oil was quoted lower late on Wednesday in London at USD62.60 a barrel, against USD64.48 late on Tuesday.
Gold traded slightly lower at USD3,308.91 an ounce on Wednesday against USD3,312.17 on Tuesday.
The global economic diary on Thursday sees US weekly jobless claims data and UK manufacturing.
Several European financial markets are closed for Labour Day.
The domestic corporate calendar on Thursday has a trading update from lender Lloyds Banking Group.
By Jeremy Cutler, Alliance News reporter
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