London open: Stocks rise after better-than-expected GDP data

London stocks rose in early trade on Friday as investors mulled better-than-expected UK GDP data, although the outlook was not as bright.

At 0840 GMT, the FTSE 100 was up 0.4% at 7,128.05, while sterling was flat against the dollar at 1.3084 as figures from the Office for National Statistics showed the economy bounced back strongly in January after taking a hit from the Omicron variant and Plan B restrictions.

GDP grew 0.8% after contracting by 0.2% in December, coming in comfortably ahead of expectations of 0.1% growth. This leave GDP 0.8% above pre-pandemic February 2020 levels.

Darren Morgan, ONS director of economic statistics, said: "All sectors grew in January with some industries that were hit particularly hard in December now performing well, including wholesaling, retailing, restaurants and takeaways. Computer programming and film and television production also had a good start to the year.

"While supply chain issues persisted in certain sectors, output in both construction and manufacturing grew for the third month running."

Paul Dales, chief UK economist at Capital Economics, said the rebound from Omicron may be as good as it gets this year, however.

"GDP in February will probably be fairly good too. But the cost of living crisis and the influence of the war in Ukraine probably means this is as good as it gets for the year," he said.

"Given that Omicron cases were still very high in the first half of January, some of the rebound in activity may have flowed into February too (although storm Eunice may have been a drag). But the hit to households’ real disposable incomes due to surging energy prices, partly due to the war in Ukraine, and higher taxes will start to be felt from March and April.

"As such, GDP growth will probably slow throughout the year. With high inflation filtering into higher price/wage expectations, this won’t stop the Bank of England from raising interest rates further, with the next hike on Thursday (probably by 25bps from 0.50% to 0.75%)."

More broadly, the Russia-Ukraine conflict remained in focus after high-level talks between the two sides on Thursday failed to yield an agreement on a 24-hour ceasefire.

In equity markets, online supermarket Ocado was the standout gainer on the FTSE 100 after the International Trade Commission again rejected patent infringement claims made against the UK company by Norwegian warehouse robot maker AutoStore.

Russian steelmaker Evraz was in the spotlight again as it said 10 members of its board had quit following the UK sanction of its largest shareholder Roman Abramovich and the suspension of its shares.

Berkeley Group gained after the housebuilder said it was on track to meet full-year earnings guidance as it continued to trade "robustly" since 1 November.

Cybersecurity firm Avast nudged up after saying it had withdrawn all its products from Russia and Belarus and suspended all marketing and sales operations in those countries with immediate effect.

Market Movers

FTSE 100 (UKX) 7,128.05 0.41%
FTSE 250 (MCX) 20,142.13 0.93%
techMARK (TASX) 4,172.86 0.50%

FTSE 100 - Risers

Ocado Group (OCDO) 1,232.50p 4.23%
Whitbread (WTB) 2,666.00p 2.78%
Shell (SHEL) 2,003.50p 2.44%
InterContinental Hotels Group (IHG) 4,919.00p 2.44%
Intermediate Capital Group (ICP) 1,570.50p 2.41%
Barratt Developments (BDEV) 547.80p 2.39%
International Consolidated Airlines Group SA (CDI) (IAG) 134.40p 2.14%
Taylor Wimpey (TW.) 133.45p 2.10%
Informa (INF) 547.20p 2.09%
Prudential (PRU) 1,098.00p 1.90%

FTSE 100 - Fallers

Polymetal International (POLY) 144.50p -4.46%
Diageo (DGE) 3,295.50p -2.36%
Croda International (CRDA) 6,722.00p -1.93%
Spirax-Sarco Engineering (SPX) 11,600.00p -1.90%
Experian (EXPN) 2,815.00p -1.75%
Relx plc (REL) 2,072.00p -1.71%
Intertek Group (ITRK) 4,777.00p -1.38%
Fresnillo (FRES) 756.20p -1.31%
Associated British Foods (ABF) 1,693.50p -1.28%
Unilever (ULVR) 3,322.00p -1.26%

FTSE 250 - Risers

Balfour Beatty (BBY) 257.00p 5.59%
Cineworld Group (CINE) 34.32p 5.18%
National Express Group (NEX) 250.40p 4.86%
Investec (INVP) 435.40p 4.44%
Aston Martin Lagonda Global Holdings (AML) 848.40p 4.10%
Ibstock (IBST) 173.60p 3.89%
Greggs (GRG) 2,310.00p 3.49%
Wood Group (John) (WG.) 174.10p 3.48%
Bellevue Healthcare Trust (Red) (BBH) 178.60p 3.48%
Trainline (TRN) 191.50p 3.23%

FTSE 250 - Fallers

Ferrexpo (FXPO) 144.50p -1.90%
Vietnam Enterprise Investments (DI) (VEIL) 715.00p -1.38%
Volution Group (FAN) 403.00p -1.35%
Smithson Investment Trust (SSON) 1,476.00p -1.20%
Genus (GNS) 2,978.00p -1.19%
Elementis (ELM) 110.80p -1.07%
Convatec Group (CTEC) 178.95p -1.05%
Kainos Group (KNOS) 1,247.00p -1.03%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 480.00p -0.93%
BH Macro Ltd. GBP Shares (BHMG) 3,770.00p -0.79%