British equities ended the session nearly 1% higher on Friday as fresh domestic economic data pointed to regained momentum in consumer spending and private-sector activity, outweighing growing geopolitical tensions tied to U.S.-Iran hostilities. Oil prices slid as the session wore on, while gold ticked modestly higher.
At 11:30 ET (13:03 GMT), the FTSE 100 had finished up 0.94%. Germanys DAX rose 0.88% and Frances CAC 40 added 0.31%. The pound gave back earlier gains, with GBP/USD down 0.02% at 1.3312.
Domestic demand and PMI data
S&P Globals flash PMI for the UK showed private-sector activity expanded in July for the first time in three months. The Composite Output Index climbed to 52.1 from 49.3 in June, marking a three-month high. Services activity strengthened to 51.8 from 48.8, a move analysts linked in part to hospitality gains associated with FIFA World Cup-related spending, although some firms cited unusually hot weather as a drag on activity.
Manufacturing output extended its run of growth to a fourth month, with the Output Index at 53.6, a 22-month high. Manufacturers reported stronger new orders, including demand related to AI deployments, data-centre supply chains and defence spending. Input price inflation eased for a third straight month, even as private-sector employment fell for a thirty-ninth consecutive month - with services reducing headcount while manufacturers added staff marginally. Business activity expectations rose to their highest level since February.
The PMI release followed Office for National Statistics figures showing UK retail sales volumes rose 1.0% in June, against market forecasts for a 0.3% decline. Shoppers spent more on air conditioning and clothing amid warmer weather and on World Cup-influenced purchases. On an annual basis, sales growth came in at 4.2%, well above forecasts of 2.3%. The data arrived alongside signs of easing inflation in June, as motor fuel and food prices moderated during a brief Gulf ceasefire, and the labour market displayed indications of stabilising.
Geopolitical pressures and market reaction
Risk appetite faced headwinds from a sharp escalation in strikes between the U.S. and Iran. U.S. Central Command reported that it conducted its 13th consecutive night of strikes against Iran, targeting military command centres, drone storage facilities and coastal surveillance infrastructure. Irans state broadcaster IRIB reported explosions across multiple provinces and said two people were wounded near Bandar Abbas. Irans Foreign Minister Abbas Araghchi accused "compromised individuals" in Washington of pursuing "mindless aggression" that would raise the cost of any eventual deal.
The U.S. House of Representatives voted 214-208 to restrict President Donald Trumps authority to conduct strikes without congressional approval, while the Senate rejected a similar measure 47-49. Separately, Axios reported the president is weighing an offensive that could exceed the scale of Februarys "Operation Epic Fury," quoting him: "I am considering a massive attack. Bigger than ever before." Secretary of State Marco Rubio said Iran would keep paying "a very heavy price."
Trade policy and tariffs
A new round of U.S. tariffs took effect Friday, covering 60 trading partners with levies ranging from 10% to 12.5%, and affecting countries including China, India and members of the EU. U.S. Trade Representative Jamieson Greer said the measures are aimed at countries that lack forced-labour import bans. The duties went into effect after an earlier global duty expired.
Commodities
Oil prices slid further amid the heightened geopolitical backdrop. Benchmark Brent fell 3.3% to $97.42 a barrel while U.S. crude (WTI) declined 2.92% to $89.50. Precious metals recorded small gains: gold futures were up 0.13% at $4,055.15 and spot gold rose 0.07% to $4,052.55.
UK corporate round-up
- Reckitt Benckiser agreed to sell its Russian hygiene business to Arnest Management LLC, and expects to take an estimated post-tax loss of about a3175 million as part of the exit.
- Hyperoptic reported its fibre network had reached 2 million homes and businesses, prompting a strategic shift from network expansion toward growing subscriber numbers after strong revenue gains.
- discoverIE Group posted a solid first quarter with organic orders up 31% and sales up 6%, saying full-year adjusted earnings are tracking ahead of board expectations.
Market takeaway
Fridays activity reflected a market environment where positive domestic data - stronger retail spending and a revival in private-sector growth - supported equities even as geopolitical tensions and fresh U.S. tariffs unsettled risk markets and exerted downward pressure on oil. Precious metals saw modest inflows as investors weighed heightened uncertainty.