London midday: FTSE touch higher as UK economy stagnates

11th Sep 2024 10:36

(Sharecast News) - London stocks were still just a touch firmer by midday on Wednesday as data showed the UK economy continued to stagnate in July.

The FTSE 100 was up 0.1% at 8,213.59.

Figures released earlier by the Office for National Statistics showed zero growth in gross domestic product, unchanged on June. Economists had been expecting 0.2% growth.

Output in the services sector grew 0.1% in July following a 0.1% decline in June. Meanwhile, production output fell 0.8% following 0.8% growth in June and construction output fell 0.4% following 0.5% growth in June.

Liz McKeown, director of economic statistics at the ONS, said: "July's monthly services growth was led by computer programmers and health, which recovered from strike action in June. These gains were partially offset by falls for advertising companies, architects and engineers.

"Manufacturing fell, overall, with a particularly poor month for car and machinery firms, while construction also declined."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "UK growth continued to flatline in July after a lacklustre June but it's raising the expectations for interest rate cuts, which is giving a little support for UK stocks early in the session.

"A rise in output from the large services sector was offset by a fall in production and construction during the month. This picture of stagnation is another piece in the jigsaw for Bank of England policymakers to consider when they meet next week.

"There may be slightly heightened concerns around the table that the economy is on the cusp of a downturn. This will reinforce expectations for two rate cuts in the months to come, but the jury is still very much out when it comes to next week's decision. Financial markets have been assessing the chance that rates will be kept on hold as above 75%, so this data point alone is unlikely to move the dial significantly."

In equity markets, Rightmove ticked up after it rejected a £5.6bn takeover proposal from Australian peer REA Group, labelling it "wholly opportunistic" and saying it undervalues the UK property platform's future prospects.

On 5 September, REA proposed 305p in cash and 0.0381 new REA shares for each Rightmove share, which implied an offer value of 698p - a 26% premium to the closing price before REA confirmed speculation about its intentions.

REA said in a statement that the proposal was a "highly compelling proposition", while Rightmove urged its shareholders not to take any action.

Trustpilot rallied as it said first-half profit was ahead of market expectations and announced a further £20m share buyback.

WH Smith gained as it reiterated its full-year outlook and unveiled a £50m share buyback after a buoyant fourth quarter.

The retailer said group sales rose 6% in the three months to 31 August, which includes its peak summer trading period, or by 4% on a like-for-like basis.

Rentokil tumbled as the pest control firm scaled back its profit guidance for the full year after weaker-than-expected summer trading in North America.

Dunelm lost ground as it reported a rise in full-year profit and sales despite a "softer" market and said it continues to see "a challenging consumer environment" and that the timing of a sector recovery remains uncertain.

Market Movers

FTSE 100 (UKX) 8,212.15 0.08%

FTSE 250 (MCX) 20,667.15 0.05%

techMARK (TASX) 4,851.04 -0.07%

FTSE 100 - Risers

Entain (ENT) 698.60p 2.89%

Prudential (PRU) 616.60p 2.53%

Fresnillo (FRES) 524.50p 2.04%

Antofagasta (ANTO) 1,694.00p 1.83%

BT Group (BT.A) 142.50p 1.75%

Intermediate Capital Group (ICG) 2,140.00p 1.71%

B&M European Value Retail S.A. (DI) (BME) 423.00p 1.71%

Melrose Industries (MRO) 465.20p 1.46%

Burberry Group (BRBY) 578.80p 1.37%

Rio Tinto (RIO) 4,623.00p 1.36%

FTSE 100 - Fallers

Rentokil Initial (RTO) 389.80p -18.02%

Smurfit Westrock (DI) (SWR) 3,281.00p -1.83%

AstraZeneca (AZN) 12,234.00p -1.39%

Berkeley Group Holdings (The) (BKG) 4,909.00p -1.38%

Ashtead Group (AHT) 5,188.00p -1.22%

Persimmon (PSN) 1,594.50p -0.96%

Diploma (DPLM) 4,398.00p -0.95%

Marks & Spencer Group (MKS) 353.30p -0.93%

Smith (DS) (SMDS) 450.40p -0.88%

Taylor Wimpey (TW.) 159.55p -0.78%

FTSE 250 - Risers

Trustpilot Group (TRST) 220.50p 14.25%

WH Smith (SMWH) 1,389.00p 13.20%

SSP Group (SSPG) 164.70p 3.26%

Genus (GNS) 1,900.00p 2.70%

Aston Martin Lagonda Global Holdings (AML) 152.80p 2.69%

Auction Technology Group (ATG) 381.50p 2.28%

W.A.G Payment Solutions (WPS) 81.80p 2.25%

Centamin (DI) (CEY) 150.20p 2.25%

Ashmore Group (ASHM) 180.20p 2.10%

BH Macro Ltd. GBP Shares (BHMG) 363.00p 1.97%

FTSE 250 - Fallers

Close Brothers Group (CBG) 526.50p -1.86%

Bloomsbury Publishing (BMY) 664.00p -1.78%

CMC Markets (CMCX) 305.00p -1.77%

IntegraFin Holding (IHP) 360.50p -1.77%

NB Private Equity Partners Ltd. (NBPE) 1,530.00p -1.67%

NCC Group (NCC) 151.20p -1.56%

Dunelm Group (DNLM) 1,216.00p -1.54%

North Atlantic Smaller Companies Inv Trust (NAS) 3,930.00p -1.50%

Alpha Group International (ALPH) 2,060.00p -1.44%

Indivior (INDV) 730.00p -1.28%