London close: Stocks firmer after US, UK GDP readings
London stocks broke into positive territory by the close on Wednesday, after US GDP was revised upwards for the third quarter, and weaker-than-expected UK growth figures.
The FTSE 100 ended the session up 0.61% at 7,341.66, and the FTSE 250 was 1.14% firmer at 23,080.79.
Sterling was also in the green, last trading up 0.64% on the dollar at $1.3347, and advancing 0.23% against the euro to €1.1782.
“US and European markets have remained on the front-foot, with equities heading into the final week of 2021 on a cautiously optimistic tone,” said IG senior market analyst Joshua Mahony.
“Risks remain evident across many stocks, from the lockdown impact on reopening stocks, to the concerns that growth stocks will falter as rates and yields head higher.
“The latest concerns over Joe Biden’s ability to pass his $2trn ‘build back better’ spending plan appear to have had little material impact in the grand scheme of things, with the package amounting to just 0.8% of annual GDP if passed in its previous form.”
Mahony said that nonetheless, Manchin’s fear that another spending package could drive up inflation did highlight the fact that rising prices were a roadblock to additional stimulus on both a monetary and a fiscal front.
“Biden will hope that a slimmed-down package could be agreed in the coming days, which could bring a short-term boost for sentiment.
“However, for now we remain caught within a period of uncertainty as markets attempt to gauge exactly how disruptive this Omicron wave is going to be for businesses.
“The upgraded third quarter GDP reading out of the US helped highlight how the economy continued to strengthen over the course of September, putting the 2021 figure on track for the best rate of growth since 1984.
On the data front, the UK economy grew less than initially thought in the third quarter even before the Omicron variant of Covid-19 hit, according to figures released earlier by the Office for National Statistics.
GDP rose 1.1%, coming in weaker than the initial estimate for growth of 1.3%.
It was also a marked slowdown from the 5.4% growth seen in the second quarter when restrictions were lifted.
Still, significant upward revisions to 2020 data meant that GDP was 1.5% below where it was at the end of 2019, revised up from a previous estimate of 2.1% below.
“Our revised figures show UK GDP recovered a little slower in the third quarter, with much weaker performances from health and hairdressers across the quarter, and the energy sector contracting more in September, than we previously estimated,” said ONS director of economic statistics Darren Morgan.
“However, stronger data for 2020 means the economy was closer to pre-pandemic levels in the third quarter.”
Bethany Beckett, UK economist at Capital Economics, said the data was “old news”, predating the recent surge in virus infections caused by the Omicron variant.
“That already seems to have prompted a weakening of activity in December.
“And, although the economy has got better at coping with restrictions with each new wave, the possibility of tighter restrictions in January is further darkening the outlook for GDP.”
In equity markets, some miners were still below the waterline, with Rio Tinto down 0.99% and BHP off 0.5%, although Anglo American reversed earlier losses to finish up 0.69%.
Croda International was off 0.38% after it agreed to sell the majority of its performance technologies and industrial chemicals business for €915m (£778m).
On the upside, Syncona surged 5.5% after it sold its portfolio company Gyroscope Therapeutics Holdings to Novartis for up to $1.5bn (£1.1bn) on a cash and debt free basis.
Just Eat Takeaway rallied 0.65% after striking a deal with One Stop - a convenience store chain owned by Tesco - to handle grocery orders and deliveries on its platform.
Travel-related stocks were on the rise again, with British Airways and Iberia parent IAG ascending 1.89%, engine maker Rolls-Royce rising 3.3%, Premier Inn owner Whitbread ahead 2.4%, and InterContinental Hotels 2.7% higher.
Doorstep lender Provident Financial was ahead 7.37%, while rail station refreshment concessionaire SSP was 4.78% firmer.
Market Movers
FTSE 100 (UKX) 7,341.66 0.61%
FTSE 250 (MCX) 23,080.79 1.14%
techMARK (TASX) 4,532.22 1.07%
FTSE 100 - Risers
Dechra Pharmaceuticals (DPH) 5,170.00p 4.47%
Rolls-Royce Holdings (RR.) 118.34p 3.30%
InterContinental Hotels Group (IHG) 4,683.00p 2.70%
Rightmove (RMV) 784.00p 2.62%
Taylor Wimpey (TW.) 173.85p 2.56%
Intermediate Capital Group (ICP) 2,168.00p 2.46%
Whitbread (WTB) 2,948.00p 2.40%
Informa (INF) 510.80p 2.36%
Persimmon (PSN) 2,816.00p 2.32%
Electrocomponents (ECM) 1,191.00p 2.32%
FTSE 100 - Fallers
Rentokil Initial (RTO) 569.80p -2.56%
Pershing Square Holdings Ltd NPV (PSH) 2,965.00p -1.50%
Rio Tinto (RIO) 4,854.50p -0.99%
United Utilities Group (UU.) 1,093.50p -0.82%
Pearson (PSON) 594.40p -0.77%
Vodafone Group (VOD) 112.54p -0.64%
Fresnillo (FRES) 877.80p -0.57%
BHP Group (BHP) 2,184.50p -0.50%
Standard Chartered (STAN) 433.70p -0.39%
Croda International (CRDA) 9,942.00p -0.38%
FTSE 250 - Risers
Provident Financial (PFG) 352.60p 7.37%
Syncona Limited NPV (SYNC) 211.00p 5.50%
SSP Group (SSPG) 240.90p 4.78%
Darktrace (DARK) 425.60p 4.16%
Volution Group (FAN) 536.00p 4.08%
IWG (IWG) 279.30p 4.06%
TP Icap Group (TCAP) 148.00p 3.73%
Molten Ventures (GROW) 989.00p 3.67%
Savills (SVS) 1,425.00p 3.64%
Kainos Group (KNOS) 1,816.00p 3.59%
FTSE 250 - Fallers
Hochschild Mining (HOC) 128.30p -2.21%
GCP Infrastructure Investments Ltd (GCP) 107.20p -1.65%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 176.00p -1.35%
Currys (CURY) 117.00p -1.18%
Moonpig Group (MOON) 371.80p -0.96%
Schroder Oriental Income Fund Ltd. (SOI) 265.50p -0.94%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 795.00p -0.87%
SDCL Energy Efficiency Income Trust (SEIT) 115.00p -0.86%
ICG Enterprise Trust (ICGT) 1,260.00p -0.79%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 515.00p -0.77%