FTSE 100 rises as oil recovery and stronger third-quarter UK GDP support stocks

The FTSE 100 climbed on Thursday as a rebound in oil prices and stronger-than-expected UK economic growth lifted energy shares and broader sentiment.

London's benchmark index was trading at 10,872.12 at 11:00 London time on Thursday, November 12, up 36.65 points, or 0.34 percent, from Wednesday's close of 10,835.47, according to Barclays Research Centre data cited by Ad Hoc News. The session was still in progress, leaving the index near its highest level in almost four weeks.

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The advance followed a 0.8 percent gain on Wednesday, when a recovery in crude prices from two-month lows supported energy producers, Yahoo Finance UK reported. The index's heavy weighting in commodity-related sectors helped distinguish its performance from technology-heavy markets that came under pressure from rising global bond yields.

UK economy accelerates in third quarter

Official data released Thursday showed UK gross domestic product increased 0.7 percent in the third quarter from the second quarter, accelerating from 0.5 percent in the previous quarter, according to an Alliance News report published by Morningstar and cited by Ad Hoc News. Annual growth reached 1.9 percent, while September monthly GDP rose 0.2 percent after a revised flat reading in August.

Services output expanded 0.9 percent in the quarter and was the main source of growth. Production output increased 0.1 percent, while construction contracted 0.7 percent. The data strengthened the impression of near-term economic resilience, although the wider trade deficit and continuing energy-price pressure remain relevant risks for UK companies, the Ad Hoc News report noted.

Oil rebound supports energy shares

Crude oil prices rebounded on Wednesday after reaching two-month lows on Tuesday, as traders assessed developments in the Middle East and their potential implications for global energy supplies, Yahoo Finance UK reported. Market attention remained focused on diplomatic efforts to reduce regional tensions alongside renewed concerns about shipping disruptions in the Strait of Hormuz.

Reports of further attacks on commercial vessels raised questions about the security of energy shipments through the waterway, an important route for international oil and gas transportation. The recovery in crude prices supported shares in major energy producers, contributing to the FTSE 100's advance.

The index's relatively large weighting in energy and other commodity-related sectors helped distinguish its performance from markets with greater exposure to technology companies, which faced particular scrutiny as investors adjusted expectations for US interest rates.

Company-specific drivers

Earlier trading on Thursday was led by company-specific developments. Burberry advanced after reporting a return to interim profit and a 6.0 percent increase in revenue, while Rolls-Royce gained after announcing a 1.5 billion pound share buyback and reaffirming its outlook, according to Hargreaves Lansdown analysis cited by Ad Hoc News.

Global backdrop mixed

The international backdrop was less uniform. Wall Street had closed higher on Wednesday, but reports about possible leadership changes at Nvidia weighed on technology sentiment. Lower oil prices and softer sterling also formed part of the market context on Thursday, while the FTSE 100's exposure to energy, mining and overseas earnings continued to influence its relative performance.

Government bond markets faced selling pressure following Tuesday's US Consumer Price Index report, which showed inflation exceeding market expectations, Yahoo Finance UK reported. The data prompted investors to reassess the outlook for US monetary policy, with market expectations increasingly reflecting the possibility of a 25-basis-point Federal Reserve interest rate increase in December.

Comments from regional Federal Reserve officials also contributed to discussions about the potential for a larger 50-basis-point adjustment, although this remained a less widely anticipated scenario. Higher bond yields can affect equity valuations by increasing financing costs and the discount rates applied to future corporate earnings.

What to watch next

• Bank of England policy outlook: Thursday's GDP and industrial production figures could influence expectations for the Bank of England's future monetary policy decisions. Slower economic growth or declining industrial production could increase expectations of monetary easing, although the outlook will also depend on inflation and other economic indicators.
• Middle East developments: Diplomatic efforts to reduce regional tensions and shipping security in the Strait of Hormuz will continue to affect crude prices and energy shares.
• US monetary policy: Market pricing for Federal Reserve rate decisions in December remains fluid following stronger-than-expected US inflation data.
• UK trade deficit and energy costs: The wider trade deficit and continuing energy-price pressure remain relevant risks for UK companies despite the stronger growth data.

For UK equities, the interaction between domestic economic conditions, global interest rates and commodity prices is expected to remain an important factor in market performance, Yahoo Finance UK noted. The intraday advance left the FTSE 100 near its highest level in almost four weeks, but the move remained modest rather than a decisive breakout, with investors assessing whether stronger UK activity could persist alongside restrictive monetary conditions and elevated geopolitical risks.