London close: Stocks hold their ground despite weak GDP reading
London stocks were still in the black by the end of the day on Friday following heavy losses in the previous session, as investors brushed off disappointing UK GDP data.
The FTSE 100 was up 0.07% at 7,029.20, although the second-tier index drifted lower by 0.28% to 23,733.56.
Figures released earlier by the Office for National Statistics showed that economic growth slowed to just 0.1% in July from 1% in June amid rising Covid cases and materials shortages. This was below consensus expectations for growth of 0.7% and leaves the UK economy 2.1% below pre-pandemic levels in February 2020.
The ONS noted issues with the ‘pingdemic’ and materials shortages.
ONS deputy national statistician Jonathan Athow said: "After many months during which the economy grew strongly, making up much of the lost ground from the pandemic, there was little growth overall in July.
"Oil and gas provided the biggest boost, having partially bounced back after summer maintenance. Car production also continued to recover from recent component shortages.
"Rising costs and shortages of raw materials pegged back the construction sector again."
Russ Mould, investment director at AJ Bell, said: "A big miss on UK GDP expectations didn’t do any harm to the pound, with the currency rising 0.2% against the US dollar to $1.3862. In turn, the main indices on the UK shrugged off the news.
"Helping to steady the ship was a conversation between US President Joe Biden and Chinese President Xi Jinping where they discussed the need to ensure competition doesn’t veer into conflict. The fact the two parties are engaging is a positive and perhaps long overdue, given this was only Biden’s second call with Xi since coming into power.
"Markets will want to see a rebuilding of relationships between the two nations after Donald Trump caused so much damage during his tenure.
"Add in the fact that the European Central Bank didn’t spook investors too much with its latest policy update - reassurance that it will only slowly withdraw stimulus measures - meant that markets are ending the week on a much brighter note."
Mould said there are still the headwinds of inflation, supply chain issues and Covid Delta variant to contend with but on balance investors are still finding plenty of reasons to keep buying equities.
Corporate news was scarce, but Cineworld was weaker after saying it would pay $170m of a judgement to dissenting shareholders of Regal Entertainment Group after the company’s takeover of the movie theatre chain in 2018.
A further $92m will be placed into an escrow account to be available to Cineworld as additional liquidity "under certain circumstance". The funds in the escrow account will paid to the dissenting shareholders no later than March 31, 2022.
FTSE 100 - Risers
Antofagasta (ANTO) 1,448.50p 3.50%
Evraz (EVR) 603.60p 3.07%
Weir Group (WEIR) 1,762.00p 2.93%
Experian (EXPN) 3,332.00p 2.55%
Associated British Foods (ABF) 1,970.00p 2.07%
Rio Tinto (RIO) 5,264.00p 1.96%
Intertek Group (ITRK) 5,440.00p 1.87%
Ashtead Group (AHT) 5,834.00p 1.53%
JD Sports Fashion (JD.) 1,049.00p 1.50%
Anglo American (AAL) 3,071.50p 1.44%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 145.32p -4.07%
Vodafone Group (VOD) 116.76p -1.78%
Land Securities Group (LAND) 698.00p -1.69%
Rolls-Royce Holdings (RR.) 109.18p -1.66%
ITV (ITV) 111.55p -1.46%
British Land Company (BLND) 515.80p -1.41%
Polymetal International (POLY) 1,372.00p -1.26%
Smith & Nephew (SN.) 1,343.50p -1.25%
BT Group (BT.A) 159.25p -1.21%
Aveva Group (AVV) 4,043.00p -1.20%
FTSE 250 - Risers
Discoverie Group (DSCV) 1,266.00p 3.27%
Diploma (DPLM) 3,142.00p 2.61%
FDM Group (Holdings) (FDM) 1,362.00p 2.56%
4Imprint Group (FOUR) 3,065.00p 2.51%
Dunelm Group (DNLM) 1,515.00p 2.50%
Diversified Energy Company (DEC) 113.40p 2.36%
Renishaw (RSW) 5,480.00p 2.14%
Genus (GNS) 5,560.00p 2.02%
Bodycote (BOY) 967.50p 1.95%
Moonpig Group (MOON) 371.40p 1.75%
FTSE 250 - Fallers
IP Group (IPO) 146.80p -5.41%
TUI AG Reg Shs (DI) (TUI) 289.20p -3.98%
Wizz Air Holdings (WIZZ) 4,721.00p -3.91%
easyJet (EZJ) 680.80p -3.87%
Auction Technology Group (ATG) 1,432.00p -3.24%
TP Icap Group (TCAP) 162.72p -3.14%
Close Brothers Group (CBG) 1,514.00p -2.82%
Essentra (ESNT) 277.00p -2.81%
Hammerson (HMSO) 32.62p -2.80%
C&C Group (CDI) (CCR) 240.00p -2.76%