US stocks and FTSE 100 higher as first quarter wraps up

The FTSE 100 and European stocks finished higher this Friday as the UK economy grew by more than first thought in the fourth quarter of 2022.

The FTSE 100 (^FTSE) rose 0.29% to close at 7,642 points, while the CAC 40 (^FCHI) in Paris climbed 1% to 7,336 points. In Germany, the DAX (^GDAXI) gained 0.83% to 15,652.

Revised figures from the Office for National Statistics (ONS) confirmed that the UK economy avoided recession in the second half of last year, posting 0.1% growth in the fourth quarter.

The economy shrank in the third quarter of last year, but Friday's data confirmed that the economy did not shrink for two successive quarters, which is the technical definition of recession.

Gabriella Dickens at Pantheon Macroeconomics noted the UK is still is the only G7 economy in which GDP has not yet recovered to the same level as quarter four of 2019, before the pandemic struck.

"Indeed, GDP still was 0.6% lower than it was three years ago in the UK, whereas it was 5.1% higher in the US, 2.9% higher in Canada, 0.8% in Japan, 1.2% in France, 1.9% in Italy and just back in line in Germany," she said.

The dominant services sector grew by 0.1%, boosted by a jump of nearly 11% for travel agents.

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Manufacturing was up by 0.5%, driven by the pharmaceutical sector, and construction grew 1.3%.

ONS director of economic statistics Darren Morgan said: "The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter."

Wall Street pushed higher on Friday as the final trading day of an eventful first quarter got underway.

The Dow Jones (^DJI) rose 0.73% to 33,098 points. The S&P 500 (^GSPC) climbed 0.77% to 4,082 points and the tech-heavy NASDAQ (^IXIC) gained 0.99% to 12,132.

Stock futures perked up on Friday morning after inflation data showed further cooling in the personal consumption expenditures (PCE) index, which is the Fed's preferred measure of inflation.

In February, "core" PCE, which strips out the more volatile costs of food and energy, rose 0.3% over the prior month and 4.6% over last year, with the annual increase coming in below Wall Street expectations for a 4.7% rise.

A slowdown in inflation could ease pressure the Federal Reserve feels to continue with its rate-hiking campaign, which Fed officials earlier this week suggested will likely continue this spring given price increases that remain too high and a bank crisis that has shown signs of ebbing.

In Asia, Tokyo's Nikkei 225 (^N225) gained 0.93% to 28,041 points, while the Hang Seng (^HSI) in Hong Kong rose 0.74% to 20,459. The Shanghai Composite (000001.SS) also gained ground, rising 0.36% to 3,272 points.

Back in London, shares in Ocado Group (OCDO.L) rose 2.27% after it said had "comprehensively won" the patent infringement suit brought by AutoStore (AUTO.OL).

Miner Rio Tinto (RIO.L) rose 0.86% after signing a joint venture with Canada's First Quantum Minerals (FM.TO) to develop the La Granja copper project in Peru.

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Rolls-Royce (RR.L) saw shares jump after it announced a new chief financial officer (CFO). The new boss of Rolls-Royce hired Helen McCabe from his alma mater BP (BP.L) as CFO. However, the stock was trading at a loss in afternoon trading and closed 0.69% lower.

The pound (GBPUSD=X) was flat against the dollar, trading around $1.23.

It was also weaker against the euro, with sterling (GBPEUR=X) hovering around €1.13.

Francesco Pesole, FX strategist at ING, said: "The pound is set to be the best-performing currency of the first quarter of 2023, having gained 2.5% against the dollar".

"Along with the improvement in the economic outlook, sterling is definitely drawing benefits from the market's conviction that the Bank of England will need to continue raising rates."

Meanwhile, Brent crude (BZ=F) lost ground and was trading at around $79 per barrel, as traders await the release of the personal consumption expenditures index on Friday, an indicator of US inflation that is certain to move oil prices.

Fear of supply disruptions continues to dominate the global oil market, so Brent is set to end the week higher despite the volatility.

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