Friday 12 March 2021 6:40 pm

Markets: FTSE eeks out gains as UK's GDP drops

The FTSE 100 has eked out a gain today following news the UK’s GDP dropped 2.9 per cent in January while UK exports to the EU were down by its sharpest drop on record.

By markets close the FTSE 100 turned positive, up 0.4 per cent to 6,761, while the FTSE 250 slid 0.1 per cent to 21,506.

Across the Pond, the S&P 500 and the Dow were trading lower at midday after closing at record highs last night, as a spike in US bond yields reignited inflation worries and dented appetite for high-growth stocks.

The Dow Jones Industrial Average rose 207 points, or 0.64 per cent, by midday to 32,693 and the S&P 500 fell five points, or 0.14 per cent, by midday to 3,933, while the Nasdaq dipped 115 points, or 0.86 per cent, to 13,283.

Read more: UK economy shrank 2.9 per cent in January as third lockdown took hold

The FTSE’s biggest gainer today was fashion house Burberry, jumping 6.87 per cent, following a trading update where the company said it expected to smash revenue an0 dprofit expectations.

Blue-chips Barclays was up 3.64 per cent and Tesco was up 1.73 per cent.

Earlier this morning, ONS data showed that monthly GDP fell 2.9 per cent in January as a fresh national lockdown took hold of the UK economy, according to new ONS data.

The January figure, which was nine per cent below its February 2020 level, was driven by a decline of 3.5 per cent in services, the Office for National Statistics said.

Read more: Brexit: UK to EU exports collapse by 40 per cent following end of transition period

Moreover, the value of UK exports to the European Union plummeted by £5.6bn after the Brexit transition period ended, in the sharpest drop since records began.

Total exports of goods fell by £5.3bn, or 19.3 per cent, from December 2020 to January 2021. The fall was mainly driven by a 40.7 per cent collapse in exports to the EU.

All eyes on oil

Oil prices retreated as the dollar gained, with US WTI crude dipping 0.05 per cent to $65.68 a barrel, while Brent crude lost 0.2 per cent to $69.40 per barrel.

Sophie Griffiths, Market Analyst at Oanda said of crude prices pausing for breath:

Read more: Analysts: UK economy ‘like a punchdrunk boxer hanging off the ropes’

“After some descent swings across the week, oil is heading into the weekend on a calmer note. Oil prices surged 2.4 per cent yesterday, boosted by President Biden signing off on the largest fiscal stimulus package in US history and his promise to vaccinate all American adults by 1 May.

“Expectations for future demand have risen sharply in line with what is now expected to be a faster US economic recovery. The fact that the US driving season could be back on is an added bonus”.

Read more: Global chief executives say UK market is more attractive after Brexit

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