London midday: Stocks maintain gains after UK GDP, ahead of US inflation

12th Jun 2024 11:02

(Sharecast News) - London stocks were still in the black by midday on Wednesday as uninspiring UK GDP data raised hopes of a rate cut this summer.

The FTSE 100 was up 0.6% at 8,195.33.

Figures released earlier by the Office for National Statistics showed the economy stagnated in April, having just come out of a recession a month earlier. GDP was flat, in line with analysts' expectations, following 0.4% growth in March.

The data showed that output in services grew 0.2% in April, the fourth consecutive monthly growth, and by 0.9% in the three months to April.

Output in production fell 0.9% following 0.2% growth in March, but was up 0.7% in the three months to April.

Meanwhile, construction output declined by 1.4% in April - the third consecutive monthly fall - and by 2.2% in the three-month period.

The manufacturing and construction sectors took a hit from wet weather. The ONS said overall rainfall in April was 155% of the long-term average according to the Met Office's Monthly Climate Summary.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "With this hiccup in the recovery, growth set to remain sluggish this year and unemployment rising to 4.4% it may give Bank of England policymakers more confidence that demand is being squashed out of the economy.

"This keeps hopes alive for interest rate cuts this summer, and while June looks unlikely August is still a possibility."

Looking ahead to the rest of the day, all eyes will be on the US CPI release at 1330 BST and the latest Federal Reserve interest rate decision at 1900 BST.

Russ Mould, investment director at AJ Bell, said: "The Fed is almost certain to keep rates on hold at today's meeting so the focus will be on any commentary that provides insight into the future trajectory of rates.

"Expectations for rate cuts have been pushed back, particularly in light of last week's hotter than expected US jobs data."

In equity markets, Rentokil surged following reports that activist investor Nelson Peltz's Trian Management has taken a significant stake in the pest control company.

According to sources cited by Bloomberg, the investment firm is now among the top 10 shareholders in Rentokil, which owns Terminix in the US.

On the downside, Legal & General slumped after it announced a £200m share buyback as it set out plans to restructure the business into three core units and promised to increase shareholder returns.

"The strategy and targets set out today signal L&G's ambition and commitment to invest to grow our business, and reward our shareholders for their support," said chief executive António Simões.

The company said it intends to return more to shareholders over 2024 to 2027, with 5% dividend growth in 2024 followed by 2% growth per annum, in addition to further share repurchases.

Safestore lost ground as the self-storage specialist said it expected annual earnings to be in the lower half of consensus forecasts as it posted a fall in interim core earnings amid tough trading conditions in most of its markets.

Outside the FTSE 350, DFS slid as it warned on profits again, pointing to weaker demand and Red Sea disruption.

The sofa retailer now expects pre-tax profit of between £10m, and £12m for FY24, down from previous guidance of £20m to £25m. DFS also cautioned there is an additional profit risk of up to £4m if Red Sea shipping delays continue through to its year end date.

Meanwhile, revenues are expected to be between £995m and £1bn, down from previous guidance of £1bn to £1.02bn.

Market Movers

FTSE 100 (UKX) 8,195.33 0.58%

FTSE 250 (MCX) 20,291.04 0.12%

techMARK (TASX) 4,808.66 0.19%

FTSE 100 - Risers

Rentokil Initial (RTO) 467.50p 12.60%

St James's Place (STJ) 529.50p 4.23%

Standard Chartered (STAN) 740.40p 2.66%

3i Group (III) 3,020.00p 1.68%

Lloyds Banking Group (LLOY) 54.26p 1.65%

NATWEST GROUP (NWG) 308.60p 1.58%

Hikma Pharmaceuticals (HIK) 2,000.00p 1.37%

Burberry Group (BRBY) 1,022.50p 1.29%

Informa (INF) 836.80p 1.23%

Marks & Spencer Group (MKS) 300.20p 1.21%

FTSE 100 - Fallers

Legal & General Group (LGEN) 231.60p -4.73%

B&M European Value Retail S.A. (DI) (BME) 477.00p -1.65%

Barclays (BARC) 206.75p -1.10%

Entain (ENT) 683.80p -0.81%

Ocado Group (OCDO) 349.00p -0.65%

Mondi (MNDI) 1,469.50p -0.61%

Auto Trader Group (AUTO) 809.80p -0.54%

Whitbread (WTB) 2,966.00p -0.54%

Flutter Entertainment (DI) (FLTR) 14,400.00p -0.52%

Admiral Group (ADM) 2,551.00p -0.47%

FTSE 250 - Risers

Patria Private Equity Trust (PPET) 554.00p 3.55%

Supermarket Income Reit (SUPR) 72.70p 3.12%

Lancashire Holdings Limited (LRE) 605.00p 2.54%

NextEnergy Solar Fund Limited Red (NESF) 74.10p 2.35%

Investec (INVP) 533.50p 2.20%

Moonpig Group (MOON) 155.00p 1.97%

Energean (ENOG) 1,036.00p 1.97%

Hiscox Limited (DI) (HSX) 1,135.00p 1.79%

Ninety One (N91) 159.50p 1.66%

AJ Bell (AJB) 378.00p 1.48%

FTSE 250 - Fallers

Safestore Holdings (SAFE) 779.50p -5.86%

FirstGroup (FGP) 160.10p -2.85%

Trainline (TRN) 311.40p -2.08%

Octopus Renewables Infrastructure Trust (ORIT) 73.10p -1.75%

Playtech (PTEC) 463.00p -1.70%

Big Yellow Group (BYG) 1,172.00p -1.68%

Foresight Group Holdings Limited NPV (FSG) 431.00p -1.60%

Genus (GNS) 1,750.00p -1.57%

PZ Cussons (PZC) 102.80p -1.53%

Me Group International (MEGP) 167.20p -1.42%