UK Markets open in 7 hrs 40 mins

FTSE rises amid 'partygate' turmoil at Westminster

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·Business Reporter, Yahoo Finance UK
·4-min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
Boris Johnson raising a toast at a gathering in No 10 Downing Street on the departure of a special adviser on 13 November 2020. Photo: Sue Gray report
Boris Johnson raising a toast at a gathering in No 10 Downing Street on the departure of a special adviser on 13 November 2020. Photo: Sue Gray report

The FTSE 100 (^FTSE) gained ground on Wednesday after volatility gripped markets earlier in the week amid fears about soaring inflation and an economic downturn. It also came as Sue Gray's final report into parties in and around Downing Street during the pandemic has been published.

London’s benchmark index rose 0.5% by the end of the day, while the CAC (^FCHI) advanced 0.9% in Paris, and the Frankfurt DAX (^GDAXI) was 0.8% higher.

The senior civil servant said "while there is no excuse for some of the behaviour set out here it is important to acknowledge that those in the most junior positions attended gatherings at which their seniors were present, or indeed organised".

The report highlighted excessive alcohol consumption, and that one person was sick, and that there was a fight. It also included pictures of some of the events in which the prime minister was in attendance.

The investigation has resulted in 126 fines being issued so far for a total of 83 people.

Watch: Sue Gray report: Senior leadership must 'bear responsibility' for Downing Street party culture during lockdown

Elsewhere, the German economy grew in the first quarter of the year, shrugging off the impact of the Ukraine war and the pandemic.

According to official data, GDP in Europe’s largest economy grew 0.2% quarter-on-quarter, and 3.8% on the year. This followed a 0.3% decline at the end of last year.

Georg Thiel, president of the statistics office, said: "Despite the difficult global economic conditions, the German economy started the year 2022 with slight growth."

Meanwhile, the pound recovered from its low against the dollar (GBPUSD=X), trading back above $1.25.

“Fears about the fragility of the UK economy look set to keep sterling under pressure after the much weaker than expected PMI data showing a marked slowdown in business activity,” Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said.

“This has led to expectation that the Bank of England (BoE) will be forced to ease off on the accelerator when it comes to higher interest rates with the market now expecting fewer hikes.”

Adam Cole, an analyst at RBC, added the pound doesn't seem "particularly sensitive to political uncertainty at the moment, with this week's losses owing more to the accumulating evidence that the economy did indeed slow sharply in April in response to the hit to household real incomes and higher taxes".

Read more: Bank of England: Climate delay could cost lenders £350bn extra

Across the pond on, the S&P 500 (^GSPC) rose 0.3% and the tech-heavy Nasdaq (^IXIC) climbed 0.6%. The Dow Jones (^DJI) was treading water at the time of the European close.

It came as natural gas prices surged to a 14-year high in America as fears over a supply crunch deepen. Orders placed with US factories for durable goods also rose in April, according to the Commerce Department on Wednesday.

This highlighted firm demand for equipment and merchandise. Bookings for durable goods, items meant to last at least three years, increased 0.4% in April after a downwardly revised 0.6% rise the previous month,

It followed the a choppy session on Wall Street on Tuesday, with the Nasdaq leading the moves lower.

“Yesterday’s US economic data didn’t help the wider attitude to risk, with a weaker than expected services PMI report, while new home sales tanked by -16.6% in April, and the March number was revised lower to -10.5%, highlighting the impact that rising rates have had on the US housing market, with declines in sales every month this year,” Michael Hewson of CMC Markets said.

“This data deterioration is being reflected in US bond markets, which have seen further weakness in yields, suggesting that investors are becoming more concerned about stagflation/recession than they are about inflation.”

Read more: Suez Crisis to COVID pandemic: How economic shocks have shaped history

Traders will also be looking ahead to the publication of the latest set of Federal Reserve minutes after it raised rates by 50bps earlier this month, pushing the upper bound of the Fed funds rate to 1%.

Asian stock markets were mixed overnight after Wall Street sank on weak US housing sales and a profit warning by social media firm Snap (SNAP), which sent the stock 43% lower on the day.

In Japan, the Nikkei (^N225) fell almost 0.3% while the Hang Seng (^HSI) rose 0.6% in Hong Kong and the Shanghai Composite (000001.SS) climbed 1.2%.

Watch: What are SPACs?

Our goal is to create a safe and engaging place for users to connect over interests and passions. In order to improve our community experience, we are temporarily suspending article commenting