FTSE pulls back as UK economy jumps 4.8%

The FTSE 100 (^ FTSE) fell Thursday morning in London, even as the latest GDP figures from the Office for National Statistics showed the economy had jumped 4.8% in the April-June quarter .

This growth reversed the 1.6% declines in the lockdowns in the first quarter.

The index had hit an 18-month high at the close on Wednesday as investors gained confidence in new measures to unblock the country, the US $ 1 billion infrastructure bill and positive news on the rollout. vaccine.

In June alone, the UK economy grew 1.0% as the reopening of hospitality and leisure facilities boosted growth.

UK GDP is now 4.4% lower than it was before the coronavirus pandemic in Q4 (October to December) 2019.

The ONS said there were increases in services, production and construction production during the quarter. The main contributors to this increase came from wholesale and retail trade, accommodation and food services and education – sectors that had been particularly affected during the closures.

“I know there are still challenges to overcome, but I am confident in the strength of the UK economy and the resilience of the British people,” Chancellor Rishi Sunak said.

“With the fastest quarterly growth rate among the G7 economies, we have exceeded expectations, and I am happy to see the UK bounce back.”

Elsewhere in Europe, the German DAX (^ GDAXI) and CAC (^ FCHI) remained stable.

US stocks appear poised for muted moves when they open later on Thursday. S&P 500 futures (ES = F) were down 0.1% at the opening in London. Futures contracts on Dow (YM = F) were stable. The Nasdaq (NQ = F) seemed poised for 0.2% declines.

Rampant inflation in the United States has raised concerns in recent weeks as the economy opens up. However, some are now turning to liquidity.

Read more: Demand for new homes in UK cools, but price hikes show “some signs of easing”

“The inflation debate is the wrong one because everything is in line with the Fed’s expectations. Yes, the wage pressure is permanent but that is the point. Yes, the old economy will take it partly badly but they are taken as a victim, “said Sébastien Galy, senior macro-strategist at Nordea.

The story continues

“What matters is what happens after liquidity starts to decline for a while under the effect of the decrease and that is both frightening and an opportunity. Our story about long growth term, especially in the style of growth, is not sustainable in the long run. “

Overnight in Asia, indices fell sharply, after days of gains. The Hang Seng (^ HSI) was down 0.7%, the SSE Composite (000001.SS) was down 0.2%, and the Japanese Nikkei (^ N225) was down 0.2%.

Investors are still figuring out how regulatory changes will affect markets over the long term.

Watch: What is inflation and why is it important?