Financial sector leads gains as FTSE finishes higher

The FTSE 100 tipped higher after a strong London session for financial firms, boosted by positive data for the US economy.

The US economy expanded by 2.9% in the final quarter of 2022, reflecting a smaller-than-expected slowdown in growth despite recent rate rises.

However, consumer firms had a more disappointing session on the FTSE, led by Diageo following a slower revenue rise in the US.

By the end of the day, the FTSE 100 had increased by 16.24 points, or 0.21%, to 7,761.11p.

Michael Hewson, chief market analyst at CMC Markets UK, said: “European markets have seen a positive session today, although the FTSE 100 and Dax have underperformed when it comes to its peers.”

The Dax closed up 0.29% and France’s Cac 40 rose by 0.77% by the close.

In the US, tech stocks led the charge after a raft of better-than-expected earnings announcements helped improve sentiment.

Meanwhile, sterling lost ground on the dollar, after the confirmation of US GDP figures.

The pound was down 0.29% against the dollar at 1.236 and was 0.2% higher against the euro at 1.138 at the close.

Mr Hewson added: “The latest economic numbers showed the US economy looks solid despite the rise in interest rates over the last 12 months.

“Today’s data also offers a couple of strands to next week’s Fed meeting, with the economy in better shape than feared, and that demand is likely to hold up which is positive for company earnings.”

In company news, Diageo was among the heaviest fallers after the distiller and brewer reported a sales slowdown in North America.

The Smirnoff and Johnnie Walker company revealed that sales increased 3% over the last six months of 2022 in the key region due to price hikes.

It resulted in a 203p fall in shares to 3,472p, despite total sales surpassing guidance.

Royal Mail parent firm International Distribution Services (IDS) finished in the green despite warning investors that it faces a £200 million hit from the impact of strike action.

It revealed that operating losses mounted to £295 million in the first nine months of its year so far, with the group hit hard by 18 days of strikes by workers.

Shares in the company closed up 2.4p at 222p as a result.

Holiday group Jet2 made gains during the session after it increased its profits outlook.

The business now expects to beat market forecasts and report pre-tax profits of between £370 million and £385 million – significantly ahead of what experts had predicted – as winter bookings surpassed pre-Covid levels. It closed 29.5p higher at 1,207p.

The price of oil moved higher on Thursday after traders welcomed the positive economic update in the US, amid hopes it could highlight improving demand.

Brent crude oil increased by 1.29% to 87.23 US dollars (£70.53) per barrel when the London markets closed.

The biggest risers on the FTSE 100 were 3i, up 134p to 1,594p, Ashtead, up 216p to 5,268p, Hargreaves Lansdown, up 29.8p to 883.6p, Lloyds, up 1.55p to 52.5p, and Kingfisher, up 7.5p to 270.5p.

The biggest fallers on the FTSE 100 were Diageo, down 203p to 3,472p, ConvaTec, down 5.4p to 233.2p, Ocado, down 14p to 683p, Glencore, down 9p to 549.5p, and AstraZeneca, down 166p to 10,644p.