Market snapshot
European equity benchmarks moved higher early on Thursday after a combination of domestic economic data and international diplomatic developments. At 03:11 ET (07:11 GMT) the FTSE 100 was marginally up 0.01%, Germany's DAX advanced 1.15% and France's CAC 40 rose 0.54%. The pound held steady at 1.3522 against the dollar.
Economic data: UK growth stronger than recent quarter
Official figures from the Office for National Statistics showed that UK gross domestic product expanded by 0.6% quarter-on-quarter in the first quarter of 2026, an acceleration from the 0.2% rise recorded in the fourth quarter of 2025. On an annual basis, GDP grew 1.1% for the three months to March 31. Monthly GDP was up 0.3% in March, compared with market expectations that had pointed to a 0.1% contraction for the month.
Sector details in the release identified the services sector as the primary driver of the quarterly increase, with construction and production also contributing to the expansion. The data provide some breathing room for the government amid political headwinds - Prime Minister Keir Starmer's administration has been contending with slipping poll numbers and renewed inflation concerns following last week's challenging local election outcomes.
Geopolitical tone lifts risk appetite
Investor sentiment received an additional boost from a warm opening at the high-profile summit in Beijing between U.S. President Donald Trump and Chinese President Xi Jinping. The leaders began their talks at the Great Hall of the People with unusually conciliatory language. President Trump described President Xi as a "great leader" and said the bilateral relationship was "going to be better than ever before." President Xi emphasised cooperation over confrontation, saying the world's two largest economies "should be partners, not rivals," and voiced hope that 2026 would mark a historic new chapter in ties between the two nations.
Xi also commented that trade teams from both sides had secured "generally balanced and positive outcomes" in talks the previous day and warned that trade wars were a losing proposition. In comments reported by Xinhua News Agency, Xi addressed the Taiwan question directly, calling preservation of peace and stability across the Taiwan Strait the single biggest common denominator between the two countries and cautioning that mishandling the issue could risk dragging the bilateral relationship into conflict.
UK corporate round-up
Several UK-listed companies reported results or strategic developments that drew market attention on the session. Princes Group posted a 17% increase in first-quarter adjusted core profit to
ITV said it remained in active discussions regarding a potential sale of its media and entertainment division to Comcast's Sky in a transaction valued at
National Grid reported annual profit that fell short of market expectations, citing elevated costs tied to repairs for storm-related damage in its U.S. operations. Spire Healthcare disclosed it had received a
Note: The above paragraphs preserve the factual outcomes and commentary provided in official company statements and market reports. Specific numeric references and direct quotes are maintained where presented in primary releases and media reports.
Key points
- UK Q1 GDP rose 0.6% quarter-on-quarter, stronger than the prior quarter's 0.2% growth and with annual growth of 1.1% for the three months to March 31.
- Markets reacted positively to an affirming start to the U.S.-China summit, where leaders exchanged conciliatory language and trade teams reported "generally balanced and positive outcomes."
- Corporate developments spanned profit beats and misses plus M&A interest: Princes Group reported higher adjusted core profit; National Grid's annual profit fell short due to storm repair costs; ITV is in talks over a potential
Risks and uncertainties
- Political pressure at home - The government remains exposed to political risk as poll numbers have weakened and inflation concerns persist, which could affect confidence-sensitive sectors such as services and consumer discretionary.
- Operational cost shocks - Companies with significant global operations can face profit pressure from unexpected repair or logistical costs, illustrated by National Grid's hit from storm-related damages in the U.S.
- Geopolitical sensitivity - While initial tone at the summit was conciliatory, tensions around issues such as Taiwan remain a flashpoint that, if mismanaged, could rapidly alter investor risk appetite and affect trade-exposed sectors.
Bottom line
The combination of firmer-than-expected domestic economic data and an upbeat start to high-level U.S.-China talks underpinned a cautious improvement in market tone for UK equities. Corporate updates were mixed, spanning profit growth, near-term cost pressures and takeover interest, leaving sector-level outcomes heterogeneous even as headline indices registered modest gains.