London open: Gains muted as UK economy contracts again

(Sharecast News) - London stocks were in the black in early trade on Friday but gains were muted as data showed the UK economy unexpectedly contracted again in October. At 0820 GMT, the FTSE 100 was up 0.1% at 8,319.24.

Figures released earlier by the Office for National Statistics showed the economy shrank 0.1%. This followed a 0.1% decline in September and missed expectations for 0.1% growth.

The data showed that production output fell by 0.6% due to a decline in manufacturing and mining and quarrying output, following a fall of 0.5% in September.

Meanwhile, construction output was down 0.4% in October following growth of 0.1% the month before.

Liz McKeown, director of economic statistics at the ONS, said: "The economy contracted slightly in October, with services showing no growth overall and production and construction both falling.

"Oil and gas extraction, pubs and restaurants and retail all had weak months, partially offset by growth in telecoms, logistics, and legal firms. However, the economy still grew a little over the last three months as a whole."

Paul Dales, chief UK economist at Capital Economics, said: "The weak starting point for the quarter means that it is unlikely that GDP will match our 0.2% q/q Q4 forecast or the Bank of England's 0.3% q/q forecast.

"That said, with the Bank still worrying that inflation is too high, we don't think the economy is weak enough to prompt the Bank to follow November's 25bps rate cut with another cut at next Thursday's December meeting. That said, we're not as confident about that as we were before this data release."

Elsewhere, a long-running survey showed that consumer confidence nudged modestly higher in December.

The latest consumer confidence index from GfK was -17, up one point on November and continuing a run of modest increases. However, it was only five points stronger than December 2023, when the index was -22.

The index for expectations about the economy over the next 12 months was unchanged at -26.

The major purchase index was also flat, at -16. "Consumers are still thinking twice about big ticket purchases, and whether they will bring Christmas cheer," said Neil Bellamy, consumer insights director at GfK

However, the personal financial situation measure for the coming year improved by two points, nudging back into positive territory at 1 and echoing the more upbeat trends seen in spring and summer.

Bellamy said: "In December, consumers adopted the holding pattern we've seen for much of 2024, with the one point increase to -17 very close to the 2024 average of -18.

"Consumer confidence is still far from strong, but there is some room for optimism.

"We need to see robust improvements in these perceptions [about the economy] before we can start talking about sustained improvements in the consumer mood."

In equity markets, Tullow Oil edged lower, having surged on Thursday as it emerged the oil and gas exploration company was in preliminary takeover talks with US-based Kosmos Energy.

Asset manager Schroders ticked higher following a report it is looking to sell its Indonesian business as it considers exiting some sub-scale markets under new boss Richard Oldfield.

After several disappointing results, Oldfield is attempting to turn the company around by offloading underperforming units, the Reuters news agency reported citing two unnamed sources with knowledge of the matter.

St James's Place was boosted by an upgrade to 'buy' at Deutsche Bank, while Greggs rose after an initiation at 'outperform' by RBC Capital Markets.

Market Movers

FTSE 100 (UKX) 8,319.24 0.09% FTSE 250 (MCX) 20,951.02 0.01% techMARK (TASX) 4,692.52 0.20%

FTSE 100 - Risers

BT Group (BT.A) 152.60p 0.93% Entain (ENT) 827.00p 0.85% Standard Chartered (STAN) 1,000.00p 0.85% International Consolidated Airlines Group SA (CDI) (IAG) 294.20p 0.82% Lloyds Banking Group (LLOY) 55.44p 0.80% Marks & Spencer Group (MKS) 393.20p 0.77% Auto Trader Group (AUTO) 824.40p 0.71% Scottish Mortgage Inv Trust (SMT) 981.80p 0.68% Smith (DS) (SMDS) 542.50p 0.65% Shell (SHEL) 2,519.00p 0.56%

FTSE 100 - Fallers

Prudential (PRU) 653.80p -1.36% Rio Tinto (RIO) 4,959.50p -0.81% Fresnillo (FRES) 674.00p -0.81% Persimmon (PSN) 1,268.00p -0.74% Glencore (GLEN) 375.25p -0.70% Pershing Square Holdings Ltd NPV (PSH) 3,872.00p -0.51% Convatec Group (CTEC) 234.20p -0.51% Croda International (CRDA) 3,475.00p -0.46% Frasers Group (FRAS) 621.50p -0.40% AstraZeneca (AZN) 10,526.00p -0.40%

FTSE 250 - Risers

St James's Place (STJ) 927.50p 3.52% CMC Markets (CMCX) 280.00p 3.13% Bodycote (BOY) 678.00p 2.88% Morgan Sindall Group (MGNS) 3,900.00p 2.50% Vesuvius (VSVS) 444.50p 2.42% Dr. Martens (DOCS) 78.90p 2.40% BlackRock World Mining Trust (BRWM) 504.00p 1.41% NextEnergy Solar Fund Limited Red (NESF) 67.10p 1.36% Ibstock (IBST) 192.80p 1.26% Spectris (SXS) 2,582.00p 1.25%

FTSE 250 - Fallers

Kainos Group (KNOS) 801.00p -3.26% Mony Group (MONY) 190.40p -2.56% Indivior (INDV) 900.00p -2.28% Bank of Georgia Group (BGEO) 4,530.00p -2.27% Wizz Air Holdings (WIZZ) 1,517.00p -2.26% Mobico Group (MCG) 79.80p -2.03% Premier Foods (PFD) 185.20p -2.01% Grainger (GRI) 228.00p -1.94% Aston Martin Lagonda Global Holdings (AML) 109.80p -1.08% Wetherspoon (J.D.) (JDW) 598.50p -1.07%