A big miss on UK GDP expectations didn’t do any harm to the pound, with the currency rising 0.2% against the US dollar to $1.3862. In turn, the main indices on the UK shrugged off the news, says Russ Mould, investment director at AJ Bell.
“The FTSE 250, which is more focused on UK domestic businesses, nudged 0.1% ahead to 23,830 while the more international-focused FTSE 100 advanced 0.3% to 7,047.
“Helping to steady the ship was a conversation between US President Joe Biden and Chinese President Xi Jinping where they discussed the need to ensure competition doesn’t veer into conflict. The fact the two parties are engaging is a positive and perhaps long overdue, given this was only Biden’s second call with Xi since coming into power.
“Markets will want to see a rebuilding of relationships between the two nations after Donald Trump caused so much damage during his tenure.
“The latest engagement between the leaders certainly helped to lift Asian markets, with the Hang Seng rising 1.4% and the Nikkei up 1.3%. Investors are clearly hoping that better relationships between the US and China will be good for trade.
“Add in the fact that the European Central Bank didn’t spook investors too much with its latest policy update – reassurance that it will only slowly withdraw stimulus measures – meant that markets are ending the week on a much brighter note.
“There are still the headwinds of inflation, supply chain issues and Covid Delta variant to contend with, but on balance markets are still finding plenty of reasons to keep buying equities.”