FTSE 100 dips despite global gains, pound higher after raft of upbeat UK economic data and GSK gets positive Zantac ruling in Florida

“The market’s short, sharp shock at the start of August is starting to feel like a distant memory as global indices claw back their losses and the VIX volatility index falls back to the sort of levels it has seen for much of the last year or so,” says AJ Bell Investment Director Russ Mould.

“Yesterday’s stronger-than-expected US retail sales and bumper earnings from Walmart helped to alleviate fears the US economy could be about to tip into recession.

“However, a move higher in the pound after some relatively upbeat data on the UK economy contributed to a slight fall in London’s flagship FTSE 100 index on Friday morning as strength in sterling hits the relative value of its constituents’ dominant overseas earnings. There was also some weakness in the property sector, with investors potentially guessing the more positive UK economic picture will reduce the impetus for further interest rate cuts from the Bank of England.

“UK retail sales bounced back strongly in July as the impact of Euro 2024 and the Olympics boosted sports shops and the weather improved, but the number was a bit below expectations and in areas like clothing and furniture demand was disappointing.”

GSK

“The latest twist in the Zantac litigation saga for pharmaceutical giant GSK looks to be a positive one with a Florida State court excluding plaintiffs’ expert testimony as inadmissible.

“However, the ongoing legal battle over links between Zantac and cancer remains an issue for the business thanks to the sheer volume of cases out there. GSK saw a pretty similar dismissal in late 2022 which it might have hoped would mark the beginning of the end to the saga, yet here we are more than a year and a half later.

“A ruling earlier this year in Delaware which was the polar opposite of this latest decision was more significant given it accounts for a large chunk of the outstanding cases – GSK continues to pursue an appeal in this case.

“The Zantac cloud is overshadowing the progress CEO Emma Walmsley has made in turning around the business and, notwithstanding the good news from Florida, this might continue to prove the case for some time to come.”

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