London midday: Stocks up as sterling hit by GDP data

(Sharecast News) - London stocks were firmer by midday on Friday as sterling lost ground after data showed the UK economy unexpectedly contracted in October. The FTSE 100 was up 0.2% at 8,324.56, while the pound was down 0.2% against the dollar at 1.2651.

A weaker pound tends to boost the top-flight index as around 70% of its constituents derive their earnings from abroad.

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

The figures 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."

Richard Hunter, head of markets at Interactive Investor, said: "The economy has had an uneven ride this year, and sentiment leading up to and then post-Budget suffered as a result of the measures which were announced. The hospitality and retail sectors have been particularly vociferous opponents of the effective hikes on their staffing costs, which has had a detrimental impact on their willingness or ability to hire and invest more. It also increases the likelihood of product price rises being introduced, which would be inflationary at a time when the issue is beginning to come under control.

"The consensus remains that the Bank of England is unlikely to cut rates next week, but the pressure is clearly mounting for some rather more aggressive action in the new year in the face of what has been listless economic growth."

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, Rentokil was the top gainer on the FTSE 100 after Trian Fund Management bought 7.5m shares in the pest control company for £31m. The shares were purchased at 413.4p each on 11 December.

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, which said investors should "buy the dip".

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

Market Movers

FTSE 100 (UKX) 8,324.56 0.15% FTSE 250 (MCX) 20,970.24 0.10% techMARK (TASX) 4,687.46 0.10%

FTSE 100 - Risers

Rentokil Initial (RTO) 414.80p 3.99% Diageo (DGE) 2,609.50p 1.99% Pershing Square Holdings Ltd NPV (PSH) 3,962.00p 1.80% Beazley (BEZ) 825.50p 1.23% Flutter Entertainment (DI) (FLTR) 22,360.00p 1.18% Pearson (PSON) 1,284.00p 1.06% Marks & Spencer Group (MKS) 394.20p 1.03% Imperial Brands (IMB) 2,619.00p 0.96% Auto Trader Group (AUTO) 826.20p 0.93% Aviva (AV.) 475.20p 0.89%

FTSE 100 - Fallers

Prudential (PRU) 653.60p -1.39% Anglo American (AAL) 2,488.50p -1.35% Croda International (CRDA) 3,448.00p -1.23% Melrose Industries (MRO) 552.00p -1.11% Spirax Group (SPX) 7,305.00p -1.02% Frasers Group (FRAS) 618.50p -0.88% BAE Systems (BA.) 1,204.00p -0.86% Persimmon (PSN) 1,267.00p -0.82% JD Sports Fashion (JD.) 101.20p -0.78% Rio Tinto (RIO) 4,964.50p -0.71%

FTSE 250 - Risers

St James's Place (STJ) 927.50p 3.52% Wood Group (John) (WG.) 69.60p 3.03% Domino's Pizza Group (DOM) 310.00p 1.97% Baillie Gifford US Growth Trust (USA) 293.00p 1.91% Greggs (GRG) 2,824.00p 1.51% Energean (ENOG) 1,004.00p 1.41% Babcock International Group (BAB) 504.50p 1.39% Bodycote (BOY) 668.00p 1.37% Keller Group (KLR) 1,524.00p 1.33% Mitie Group (MTO) 109.80p 1.29%

FTSE 250 - Fallers

Foresight Environmental Infrastructure Limited (FGEN) 70.60p -3.29% Wizz Air Holdings (WIZZ) 1,505.00p -3.03% Raspberry PI Holdings (RPI) 477.60p -2.13% Essentra (ESNT) 140.40p -1.96% PureTech Health (PRTC) 164.40p -1.91% Aston Martin Lagonda Global Holdings (AML) 109.30p -1.53% Victrex plc (VCT) 1,132.00p -1.39% Pets at Home Group (PETS) 226.00p -1.31% Savills (SVS) 1,076.00p -1.28% Worldwide Healthcare Trust (WWH) 325.00p -1.22%