FTSE 100 Live: Stocks jump as oil falls back; economy saw surprise growth in July

Welcome back to City AM’s FTSE 100 liveblog.

The UK’s blue-chip index is set to jump, according to IG futures.

The Office for National Statistics (ONS) has revealed that the UK economy’s (GDP) grew by 0.4 per cent in July, outdoing the prior month and defying economists’ expectations of zero growth for the period.

The UK’s economy grew by 0.3 per cent last year, as hospitality and leisure firms took a boost from World Cup fever and record summer temperatures. But analysts had warned that soaring energy prices and fragile consumer confidence have put growth in jeopardy.

Reacting to today’s surprise growth figures, economists said they expect the Bank of England to leave interest rates unchanged next week before hiking by 0.25 per cent in November.

Felix Feather, an economist at Aberdeen, said: “Economic activity has held up surprisingly well against the effects of the energy cost shock so far, with the data persistently outperforming expectations.

“These figures will go some way to reassuring Bank of England policymakers that the current level of rates is not meaningfully restricting growth, which in turn suggests that rates could be moved higher without causing undue economic scarring.”

Danni Hewson, AJ Bell’s head of financial analysis, said: “Putting up interest rates in the UK won’t lower geopolitical tensions or bring down international energy prices, but it does risk weakening domestic demand at exactly the moment households and businesses are struggling to maintain a recent uptick in confidence.”

Oil prices undid some of Thursday’s massive gains on Friday morning. Brent crude – the international benchmark for oil prices – dropped about one per cent in early trading to $106 per barrel, though this remains its highest level since May.

We’ll be bringing you the latest market updates and analysis.

This morning’s top stories:

• Surge in borrowing costs could force Healey to deliver ‘emergency Budget’
• Wetherspoon boss Tim Martin says government ‘unfriendly to entrepreneurs’ amid wealth exodus fears
• Anthropic touts ‘strongest safeguards’ as AI warning dogs IPO push
• Apple shares slip as iPhone price hikes steal foldable’s thunder
• OpenAI alum moves into ChatGPT maker’s old office in push to serve UK’s fintechs