London open: Stocks tick higher as UK GDP revised upwards
London stocks edged higher in early trade on Friday following heavy losses in the previous session, while sterling ticked back above $1.11, as first-quarter UK GDP figures were revised upwards.
At 0830 BST, the FTSE 100 was 0.3% firmer at 6,904.01, while the pound was up 0.4% against the dollar at 1.1158. Sterling fell below the $1.11 level last week after chancellor Kwasi Kwarteng announced a swathe of tax cuts in his so-called mini-budget.
Prime minister Liz Truss and Kwarteng are due to meet with the Office for Budget Responsibility later in the day to discuss the budget forecast process.
On the macro front, data released earlier by the Office for National Statistics showed the economy nudged higher in the last quarter, reversing an earlier estimate for a small decline.
The ONS said UK GDP was estimated to have increased by 0.2% in the second quarter, after it revised its first estimate for a 0.1% contraction.
It noted that there continued to be weakness in the wholesale and retail trade, and in health industries. But services output was estimated to have increased by 0.2%, reflecting "an easing" in information and communication, and professional, scientific and technical activities output.
The ONS had previously estimated that services output had fallen by 0.4%, reflecting a reduction in Covid-19 activities.
Richard Hunter, head of markets at Interactive Investor, said: "In what has been a calamitous week for the UK economy, there was a rare glimmer of hope as the GDP reading edged into positive territory for the second quarter unexpectedly, defying expectations of a recession - for now.
"Sterling has also found some cautious support against the dollar after the Bank of England’s previous decision to resume bond buying, although the jitters will remain as the government continues to justify and explain the implications of its fiscal largesse.
"In the meantime, the door is now open for the Bank to pursue a more aggressive rate hiking cycle, the implications of which have already been felt across a number of sectors, with the housebuilders in the eye of the storm."
Investors were also digesting the latest data from mortgage lender Nationwide, which showed that house prices were steady on the month in September following a 0.7% increase in August, and versus expectations of a 0.3% jump.
On the year, house price growth eased to 9.5% in September from 10% a month earlier. This marked the first single-digit growth since last October and the lowest level since April 2021.
London remained the weakest-performing region, although it did see a modest pickup in annual growth to 6.7% from 6.0% last quarter.
Nationwide chief economist Robert Gardener said headwinds are growing stronger, suggesting the market will slow further in the months ahead.
"High inflation is exerting significant pressure on household budgets with consumer confidence declining to all-time lows," he said.
Gardner said housing affordability is becoming more stretched, with deposit requirements a major barrier. He pointed out that a 10% deposit on a typical first-time buyer property is equivalent to almost 60% of annual gross earnings, which is an all-time high.
"Moreover, the significant increase in prices in recent years. together with the significant increase in mortgage rates since the start of the year. have pushed the typical mortgage payment as a share of take-home pay well above the long-run average," he said.
Gabriella Dickens, senior UK economist at Pantheon Macroeconomics, said: "The latest data from Nationwide suggest the staggering jump in mortgage rates finally is starting to weigh on buyer demand."
In equity markets, housebuilders were on the rise, having taken a beating recently on concerns about the impact of higher interest rates. Barratt, Taylor Wimpey, Persimmon, Crest Nicholson and Vistry all gained.
Barclays was in focus as the bank agreed with the US Securities and Exchange Commission to pay $361m after control failures led it to sell $17.7bn of securities it was not allowed to issue.
Elsewhere, sportswear retailer JD Sports was in the black after it has struck a "connected partnership" with footwear giant Nike that will give the group's customers "unprecedented access" to select member-only shoes and apparel.
FTSE 100 - Risers
Barratt Developments (BDEV) 335.00p 3.59%
Lloyds Banking Group (LLOY) 41.97p 3.08%
Taylor Wimpey (TW.) 87.64p 3.01%
Persimmon (PSN) 1,206.00p 2.64%
Phoenix Group Holdings (PHNX) 524.60p 2.46%
Legal & General Group (LGEN) 217.10p 2.16%
NATWEST GROUP (NWG) 225.60p 2.04%
Melrose Industries (MRO) 100.95p 1.91%
Burberry Group (BRBY) 1,765.50p 1.82%
Rolls-Royce Holdings (RR.) 69.50p 1.82%
FTSE 100 - Fallers
Unilever (ULVR) 4,019.50p -1.49%
Reckitt Benckiser Group (RKT) 6,066.00p -0.95%
Auto Trader Group (AUTO) 491.00p -0.83%
Diageo (DGE) 3,751.00p -0.82%
Experian (EXPN) 2,618.00p -0.80%
F&C Investment Trust (FCIT) 888.00p -0.78%
Rightmove (RMV) 463.10p -0.75%
Relx plc (REL) 2,183.00p -0.68%
BAE Systems (BA.) 819.40p -0.68%
Halma (HLMA) 1,998.50p -0.62%
FTSE 250 - Risers
Synthomer (SYNT) 94.55p 5.00%
Petershill Partners (PHLL) 176.60p 4.74%
Hochschild Mining (HOC) 56.65p 4.14%
TI Fluid Systems (TIFS) 122.40p 3.55%
easyJet (EZJ) 302.60p 3.38%
Abrdn (ABDN) 138.65p 3.35%
Crest Nicholson Holdings (CRST) 178.20p 3.30%
Vistry Group (VTY) 573.50p 2.96%
AJ Bell (AJB) 262.60p 2.90%
Marks & Spencer Group (MKS) 98.24p 2.83%
FTSE 250 - Fallers
Oxford Instruments (OXIG) 1,686.00p -4.42%
Hilton Food Group (HFG) 511.00p -3.40%
Discoverie Group (DSCV) 630.00p -3.37%
Tritax Eurobox (GBP) (EBOX) 58.40p -2.67%
Weir Group (WEIR) 1,369.50p -2.49%
Telecom Plus (TEP) 1,648.00p -2.25%
Baillie Gifford Japan Trust (BGFD) 714.00p -2.19%
JPMorgan Japanese Inv Trust (JFJ) 431.50p -1.93%
Herald Investment Trust (HRI) 1,540.00p -1.79%
Sirius Real Estate Ltd. (SRE) 65.40p -1.65%