London open: Stocks gain despite dire GDP data
London stocks rose in early trade on Wednesday despite confirmation that the UK economy has fallen into its worst recession on record.
At 0845 BST, the FTSE 100 was up 0.6% at 6,190.29, while sterling was down 0.1% against the dollar at 1.3042.
Figures released earlier by the Office for National Statistics showed the economy shrank by a fifth in the second quarter of 2020 as the country sank into the deepest recession on record because of the Covid-19 crisis.
Gross domestic product dropped 20.4% in the three months to the end of June from the previous quarter. This was bigger than reported to date by any EU member and double the fall recorded in the US. The record drop, broadly in line with expectations, was caused by the near shutdown of the economy from late March as the government sought to stem the spread of the coronavirus.
The second-quarter plunge followed a 2.2% contraction in the first three months of 2020 which covered the early stages of the virus's spread in the UK and the start of the economic shutdown.
Still, investors appeared to be taking some comfort from the June figures, which showed that GDP increased 8.7% as shops, factories and construction sites started to reopen, although the economy is still 17.2% smaller than before the virus hit the UK.
Spreadex analyst Connor Campbell said the June growth "has sparked hopes that the country can turn the ship around".
In equity markets, Admiral rallied as the insurer reinstated its special dividend and reported a better-than-expected jump in first-half pre-tax profit after motor claims fell as drivers stayed home during the lockdown.
Just Eat Takeaway was also in the black as first-half earnings and revenue grew as it benefited from lockdowns.
M&G gained even as it said first-half profit more than halved as the savings and investments company suffered fund outflows and pressure on retail margins.
On the downside, Spirax-Sarco fell as it said organic revenue growth in the second half of the year will be lower than it anticipated in May.
Avast was weaker even as the cybersecurity firm said full-year organic revenue should be at the upper end of forecasts as it reported a strong first half driven by more people working from home during lockdown.
In broker note action, shares of British Airways and Iberia parent IAG flew lower after a downgrade to ‘neutral’ at Davy, while Dunelm was boosted by an initiation at ‘overweight’ by Barclays.
Market Movers
FTSE 100 (UKX) 6,190.29 0.58%
FTSE 250 (MCX) 17,936.30 -0.34%
techMARK (TASX) 3,910.85 0.15%
FTSE 100 - Risers
Admiral Group (ADM) 2,705.00p 7.13%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,968.00p 3.34%
M&G (MNG) 178.25p 2.65%
BT Group (BT.A) 111.85p 2.57%
HSBC Holdings (HSBA) 352.80p 1.97%
Royal Dutch Shell 'B' (RDSB) 1,192.20p 1.78%
Vodafone Group (VOD) 120.84p 1.73%
British American Tobacco (BATS) 2,634.00p 1.50%
Imperial Brands (IMB) 1,300.00p 1.48%
Tesco (TSCO) 227.80p 1.38%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 213.50p -2.38%
Rolls-Royce Holdings (RR.) 269.10p -1.68%
Avast (AVST) 590.00p -1.67%
Polymetal International (POLY) 1,902.00p -1.53%
Spirax-Sarco Engineering (SPX) 10,505.00p -1.45%
Informa (INF) 417.70p -1.37%
Pearson (PSON) 614.80p -1.28%
Whitbread (WTB) 2,543.00p -1.17%
GVC Holdings (GVC) 776.20p -1.12%
Compass Group (CPG) 1,227.00p -1.05%
FTSE 250 - Risers
FirstGroup (FGP) 46.06p 4.59%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,968.00p 3.34%
Just Group (JUST) 51.75p 2.48%
Dunelm Group (DNLM) 1,341.00p 2.13%
Rank Group (RNK) 141.20p 2.02%
Close Brothers Group (CBG) 1,179.00p 1.55%
TBC Bank Group (TBCG) 863.00p 1.53%
C&C Group (CCR) 229.50p 1.32%
Helios Towers (HTWS) 169.20p 1.32%
Virgin Money UK (VMUK) 98.02p 1.30%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 68.00p -6.85%
Cineworld Group (CINE) 50.66p -4.31%
Bellway (BWY) 2,354.00p -4.15%
Balfour Beatty (BBY) 251.80p -3.82%
Hammerson (HMSO) 53.74p -3.14%
Petrofac Ltd. (PFC) 175.95p -2.84%
Airtel Africa (AAF) 58.40p -2.67%
PPHE Hotel Group Ltd (PPH) 1,100.00p -2.65%
Greencore Group (GNC) 130.60p -2.54%
TUI AG Reg Shs (DI) (TUI) 373.40p -2.40%