FTSE 100 Rises 0.4% as July GDP Beats Expectations

The FTSE 100 rose 0.4% on Friday as stronger-than-expected UK economic growth offset escalating geopolitical tensions in the Middle East. While regional supply concerns rattled global energy markets, domestic economic data provided a cushion for British equities.

"Ongoing strength in the services sector was only partially offset by falls in both production and construction," said Liz McKeown, Director of Economic Statistics at the Office for National Statistics, adding that artificial intelligence appeared to be lifting software development.

Macroeconomic Drivers and GDP Growth

Britain's economy grew 0.4% in July, according to an Investing.com report. This performance extended June's 0.3% gain and surpassed analyst expectations for flat growth.

Annual growth reached 1.6%, marking the fastest pace recorded since February 2025. Across broader European markets, Germany's DAX and France's CAC 40 each added 0.8% during the session.

Geopolitical Developments in the Red Sea

Market resilience was tested by mounting disruptions along critical maritime trade routes. Houthi forces completed an 18-hour offensive to secure full control of Yemen's Red Sea coastline, capturing the strategic Bab al-Mandeb strait and the port of Mocha.

The territorial gains triggered immediate military responses, including Saudi air raids targeting contested zones near the coastline.

Oil Prices and Energy Market Reaction

Despite the escalation near vital shipping lanes, crude oil benchmarks retreated on Friday, shedding gains accumulated during the previous session.

Brent crude fell 3.12% to $104.28 a barrel, while U.S. West Texas Intermediate dropped 3.17% to settle at $99.19 a barrel.