UK Stock Market Rises as Strong Economic Growth Provides Support Amid Political Uncertainty

Deep News
05/15

UK stocks edged higher on Thursday, with a robust first-quarter economic growth providing some cushion as domestic political uncertainty escalated and investor sentiment remained under pressure. The blue-chip FTSE 100 index closed up 0.46%, while the mid-cap FTSE 250 index gained 1.33%. Data showed the UK economy unexpectedly grew in March, indicating that the underlying economic fundamentals were stronger than the widespread market concerns following the economic downturn in the last quarter of the previous year. However, some analysts warned that inventory hoarding by businesses due to supply chain disruptions caused by the Middle East conflict may have artificially inflated the economic data. Rob Wood, Chief UK Economist at Pantheon Macroeconomics, stated, "We need to be cautious in judging the real economic trend." Economists also believe that statistical accounting issues related to changes in post-pandemic household consumption patterns may have contributed to the strong first-quarter economic performance. George Brown, Senior Economist at Schroders, suggested that economic growth momentum may gradually weaken over time. "UK GDP has a tendency to start the year strong but often slows down later due to residual seasonal factors... This means the Bank of England will maintain a hawkish stance but will not actually embark on multiple interest rate hikes as priced in by the market." Data compiled by the London Stock Exchange Group shows that market participants expect the Bank of England to raise interest rates at least twice this year.

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