FTSE shrugs off GDP downgrade as Omicron study boosts markets
The FTSE 100 clocked up its second straight day in the green on Wednesday
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Your support makes all the difference.Traders in London shrugged off a downgrade to the UK’s GDP to post a second straight day of strong gains on Wednesday.
The FTSE 100 was led higher by hotel groups and, for the second day in a row, a buoyant housing sector.
It ended the day up 44.25 points, a 0.6% rise, to 7341.66.
Close to the top was Whitbread the firm behind Premier Inn which was hot on the heels of Intercontinental Hotels, the Buckinghamshire-based owner of Holiday Inn and several other hotel chains.
The businesses had been buoyed by a general positive sentiment in the travel sector after the release of a new study which shows that people infected with Omicron are less likely to need hospital treatment than those who had Delta.
Following a late rally after the study was released, the two companies both ended up more than 2%, while Rolls-Royce – which gets paid based on how long its plane engines fly for – rose 3.3%.
The happy mood by Wednesday afternoon came in the face of concerns earlier in the day when the Office for National Statistics (ONS) downgraded its growth estimate.
The ONS had previously believed that Gross Domestic Product (GDP) rose by 1.3% between July and September, but on Wednesday it lowered this to 1.1%.
CMC Markets analyst Michael Hewson said that the bad showing in the third quarter masked an overall upgrade in GDP over the last year.
“The quarterly number was revised down from 1.3% to 1.1%%, which was disappointing, however on an annualised basis the number was revised higher to 6.8% from 6.6%,” he said.
“This upgrade means that the UK economy is closer to pre-pandemic levels than originally thought, despite the slowdown seen in the quarterly number.
“That being said, it is still pretty much rear-view mirror stuff with the immediate focus on how much damage the events of the last three weeks have done with respect to Omicron.”
The FTSE’s international peers also performed well on Wednesday. In Germany, the Dax rose 1%, in France the Cac 40 was up 1.2%, while in the US the S&P 500 rose 0.8% and the Dow Jones had gained 0.5% shortly after markets closed in Europe.
In currency markets, the pound was practically flat. By the end of the day it could buy 1.3348 dollars or 1.1785 euros.
Taylor Wimpey was one of the big gainers on the day, leading a charge by some of the UK’s largest housebuilders as its shares rose by 2.6%.
On Wednesday morning, the business promised to end a practice that meant leasehold ground rents would double every decade for buyers of its homes.
The decision follows an investigation by the Competition and Markets Authority into Taylor Wimpey and several of its rivals.
“These are totally unwarranted obligations that lead to people being trapped in their homes, struggling to sell or obtain a mortgage,” said CMA chief executive Andrea Coscelli who warned other housebuilders to do the same or potentially face court action.
The biggest risers on the FTSE 100 were Dechra Pharmaceuticals, up 222p to 5,190p, Rolls-Royce, up 3.78p to 118.34p, IHG, up 123p to 4,671p, Rightmove, up 20p to 784p, and Taylor Wimpey, up 4.35p to 336.6p.
The biggest fallers on the FTSE 100 were Rentokil, down 15p to 569.8p, United Utilities, down 45p to 2,965p, Rio Tinto, down 49p to 4,854.5p, United Utilities, down 9p to 1,094.5p, and Pearson, down 5p to 594.4p.