London midday: Stocks rise despite dire UK GDP data; Pearson surges

London stocks had turned higher by midday on Friday despite the release of dire UK GDP data and concerns about a second wave of coronavirus infections, following heavy losses in the previous session.

The FTSE 100 was up 1% at 6,136.94.

Data released earlier by the Office for National Statistics showed the economy contracted by a record 20.4% on the month in April. This followed a 5.8% drop in March and was worse than the 18.4% decline expected by economists. It also marked the worst monthly fall since records began in 1997.

Manufacturing production fell 24.3% in April, while industrial production was down 20.3%. Construction output slid 40.1% and services production was 19% lower. All four sectors suffered their worst monthly falls since their series began.

Jonathan Athow, deputy national statistician for Economic Statistics, said: "April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall. In April the economy was around 25% smaller than in February."

Andrew Wishart, UK economist at Capital Economics, said: "Given the lockdown started to be eased in May, April will mark the trough in GDP. So we are past the worst. But the recovery will be a drawn-out affair as restrictions are only lifted gradually and businesses and consumers continue to exercise caution.

"And while the trough in activity is now behind us, the fiscal cost of the collapse and the rise in the unemployment rate to over 8% that will result are only just starting to emerge."

Despite the positive tone in markets, concerns about a second wave of coronavirus infections - which meant US stocks suffered their worst fall in 12 weeks on Thursday - continued to play on investors' minds.

IG analyst Joshua Mahony said: "Markets appear to have stabilised after yesterday’s crash in global equities, with traders attempting to figure out whether this is finally the beginning of the second major selloff.

"We appear to be shifting from a phase where everyone looks towards the reopening as a cause for optimism, to one where we begin to refocus on Covid case numbers with trepidation. The gains we are seeing today highlight the fact that a second wave still remains far from guaranteed, yet we are certainly likely to see volatility and market sensitivity pick up in the coming weeks as Covid cases roll in."

He added that a rise in coronavirus cases in US states such as Florida, Texas, California, Nevada, and North Carolina provide a potential warning sign for nations hoping to loosen restrictions.

In equity markets, education publisher Pearson was sitting pretty at the top of the FTSE 100 amid reports it’s in talks with Cevian Capital after the activist investor took a 5.4% stake in the company.

Travel stocks were also in the black after falling sharply on Thursday, with cruise operator Carnival, budget airline easyJet, British Airways parent IAG and InterContinental Hotels all up.

Events and publishing company Informa gained as it warned revenue was likely to fall by almost a third in 2020 but indicated prospects were brightening as business starts to revive in China.

Miniature wargames manufacturer Games Workshop surged after saying that its recovery since re-opening has been better than expected and that full-year profit and sales are set to be ahead of 2019.

On the downside, precious metals miners Fresnillo and Polymetal retreated, having risen in the previous session as gold prices rallied on the back of dovish outlook comments from the US Federal Reserve.

Market Movers

FTSE 100 (UKX) 6,136.94 0.99%
FTSE 250 (MCX) 17,167.14 1.14%
techMARK (TASX) 3,674.92 -0.02%

FTSE 100 - Risers

Pearson (PSON) 578.00p 12.67%
Informa (INF) 470.50p 8.36%
Carnival (CCL) 1,283.00p 7.82%
easyJet (EZJ) 814.80p 7.18%
Melrose Industries (MRO) 118.40p 6.52%
Rolls-Royce Holdings (RR.) 338.20p 5.16%
Burberry Group (BRBY) 1,618.00p 3.98%
International Consolidated Airlines Group SA (CDI) (IAG) 273.30p 3.96%
ITV (ITV) 78.96p 3.89%
Standard Chartered (STAN) 429.80p 3.82%

FTSE 100 - Fallers

Aveva Group (AVV) 3,811.00p -2.83%
Polymetal International (POLY) 1,500.00p -2.34%
Pennon Group (PNN) 1,071.00p -2.06%
Admiral Group (ADM) 2,231.00p -1.89%
Rightmove (RMV) 560.80p -1.34%
Tesco (TSCO) 224.70p -1.32%
Hikma Pharmaceuticals (HIK) 2,292.00p -1.21%
Unilever (ULVR) 4,286.00p -1.15%
Morrison (Wm) Supermarkets (MRW) 183.80p -1.10%
Severn Trent (SVT) 2,353.00p -1.09%

FTSE 250 - Risers

Games Workshop Group (GAW) 7,810.00p 10.00%
Aston Martin Lagonda Global Holdings (AML) 71.35p 8.93%
Hyve Group (HYVE) 125.90p 8.91%
Mitchells & Butlers (MAB) 217.00p 7.96%
Cineworld Group (CINE) 78.10p 7.37%
Forterra (FORT) 214.50p 6.19%
Marston's (MARS) 67.50p 5.47%
Safestore Holdings (SAFE) 696.00p 5.37%
Senior (SNR) 81.60p 5.36%
B&M European Value Retail S.A. (DI) (BME) 371.60p 5.21%

FTSE 250 - Fallers

Helios Towers (HTWS) 160.20p -12.93%
Biffa (BIFF) 204.00p -3.09%
Centamin (DI) (CEY) 162.55p -2.90%
Sirius Real Estate Ltd. (SRE) 72.40p -2.82%
St. Modwen Properties (SMP) 337.00p -2.18%
Greggs (GRG) 1,648.00p -2.14%
Kainos Group (KNOS) 708.00p -2.07%
Convatec Group (CTEC) 196.20p -2.00%
Allianz Technology Trust (ATT) 2,080.00p -1.89%
ICG Enterprise Trust (ICGT) 746.00p -1.84%