WATCH: European stocks rise as China reports economic growth
European stock markets opened higher on Friday, as investors cheered record first quarter growth in China.
It was the first time since February 2020 that the FTSE had pushed above the 7,000 points level as governments roll out stimulus packages and business confidence surveys are hitting record highs. The UK’s blue-chip index is now more than 40% higher than it was at the worst of last year’s sell-off.
“The UK market has been something of a laggard, compared to international markets on both sides of the Atlantic," Steve Clayton, Hargreaves Lansdown select fund manager, said.
"Whether the FTSE can close the gap against US and European market indexes is another matter. The UK market has much bigger exposure to commodities and banking than Wall Street or Frankfurt, so the performance of those sectors will be key to the UK’s relative performance in the years ahead."
Banks were among the top performers on Friday, with four of the high streets biggest banks appearing in the top 12 biggest risers, with each up by more than 2%. Oil producers and miners were also rallying.
"Investors have been reluctant to jump back into GBP longs and some caution may be warranted ahead of the Scottish parliamentary elections on 6 May – where the appetite for independence will be assessed," Francesco Pesole, a foreign exchange strategist at ING Bank, said.
Stocks were supported by strong Chinese growth numbers published overnight. Gross domestic product (GDP) in the world’s second largest economy jumped 18.3% in the first quarter, according to official data.
While this was below the 19% forecast by economists in a Reuters poll, it was the fastest growth since quarterly records began in 1992, and up from 6.5% in the fourth quarter of last year.
"The upshot is that with the economy already above its pre-virus trend and policy support being withdrawn, China's post-COVID rebound is levelling off," said Julian Evans-Pritchard, senior china economist at Capital Economics.
"We expect quarter-on-quarter growth to remain modest during the rest of this year as the recent boom in construction and exports unwinds, pulling activity back towards trend."
In Asia, the Shanghai Composite (000001.SS) rose 0.8% while the Chinese yuan eased.
Analysts said the China data did little to change expectations of a strong recovery and further policy tightening to curb any excesses in property investments.
WATCH: China economy grows despite pandemic
Yesterday, US economic data helped propel global stocks to near record highs as investors priced in a solid global recovery from the coronavirus-induced slump.
Stocks were supported by a 9.8% surge in American retail sales last month, and a post-pandemic low of 576k in weekly jobless claims.
Bond markets yields fell sharply, with the US 10 year sliding over 7bps to a one month low.
“The slide in yields was particularly puzzling given that for the past three months yields have been rising due to concerns about higher prices and a strong economic recovery, both of which we are currently seeing,” Michael Hewson of CMC Markets said.
“That can only mean one of two things, either that the recovery is in the price, or that markets think this could be as good as it gets.”
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