London open: FTSE nudges up after stronger-than-expected UK GDP

11th Jul 2024 07:57

(Sharecast News) - London stocks nudged higher in early trade on Thursday following better-than-expected UK GDP data, as investors looked ahead to the latest US inflation reading.

At 0850 , the FTSE was up 0.1% at 8,204.48.

Figures released earlier by the Office for National Statistics showed that the economy grew 0.4% on the month in May following a flat reading in April. This was ahead of expectations for 0.2% growth.

Leading the improvement was the construction sector, which grew at its fastest rate in almost a year. It reversed April's 1.1% slide - when wet weather hit activity - with a 1.9% uplift.

Production output also improved, however, nudging up 0.2% following a 0.9% decline a month earlier. Services growth was unchanged at 0.3%.

In the three months to May, GDP rose by 0.9%, driven by a 1.1% uplift in services output. It was the quickest pace of growth for over two years, the ONS noted.

Liz McKeown, director of economic statistics at the ONS, said: "The economy grew strongly in May, with all three main sectors seeing increases. Many retailers and wholesalers had a good month, with both bouncing back from a weak April.

"Construction grew at its fastest rate in almost a year after recent weakness, with house building and infrastructure projects boosting the industry."

Capital Economics said the stronger-than-expected rise in GDP in May "will be welcomed by the new Chancellor after announcing earlier this week that she will make kickstarting economic growth a 'national mission'.

"Indeed, the improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate."

Investors were also mulling the latest residential market survey from the Royal Institution of Chartered Surveyors, which showed that house prices were unchanged in June, but optimism sparked across the sector following the general election.

The headline house price balance in the survey was unchanged month-on-month at -17.

The new buyer enquiries balance was also broadly in line with the previous reading, easing just one point to -7. In contrast, newly agreed sales improved to -7 from -13.

However, three-month price expectations stabilised, with a net balance of 5. Prior to June's survey, the balance had been in contractionary territory for two years.

A net balance of 20 also expect a recovery in residential sales in the near-term, up from 10 in June and the highest level since January 2022.

"These results indicate that respondents have confidence in the newly-elected Labour government, which has voiced a strong commitment to boosting the housing market, aiming to deliver 1.5m homes over the next five years - a figure not hit since the 1960s," Rics noted.

Looking ahead to the rest of the day, the US consumer price index for June is due at 1330 BST.

In UK equity markets, water companies gained, with Pennon, Severn Trent and United Utilities all higher after regulator Ofwat outlined draft determinations regarding the industry's five-year investment plans. Both Severn Trent and Pennon noted that the regulator had categorised their business plans as "outstanding".

Severn Trent was also in focus after a trading statement, while Pennon announced that its chief financial officer Steve Buck was stepping down for personal reasons, to be succeeded by Laura Flowerdew.

RS Group advanced as the industrial maintenance, repair and operation products firm said it continues to expect a stabilisation in trading conditions over the current financial year, after a slight fall in like-for-like sales in the first quarter.

Dr Martens was also trading up as the iconic bootmaker held annual guidance and said trading since the start of the current financial year has been in line with expectations.

On the downside, DCC fell as it reported a "modest" improvement in first-quarter operating profit.

Moonpig slid after a group of investors sold 35m shares in the company in a placing via Citi, JPMorgan and Jefferies, raising proceeds of approximately £61m.

According to terms seen by Bloomberg, Exponent Private Equity, Lexington Partners, Blackstone Group, LGT Capital Partners, GoldPoint, Kaust Investment Management Co, Storebrand International Private Equity & Patria Investments were all involved in the sales.

The sale represents around 10.2% of Moonpig's issued share capital and the sale price of 175p is a discount of 13.4% to the closing share price on Wednesday.

Market Movers

FTSE 100 (UKX) 8,204.48 0.13%

FTSE 250 (MCX) 20,922.91 -0.02%

techMARK (TASX) 4,791.20 0.07%

FTSE 100 - Risers

United Utilities Group (UU.) 1,089.50p 2.20%

CRH (CDI) (CRH) 6,010.00p 2.00%

Entain (ENT) 673.40p 2.00%

Severn Trent (SVT) 2,660.00p 1.64%

Smurfit Westrock (DI) (SWR) 3,543.00p 1.46%

easyJet (EZJ) 484.00p 1.19%

BT Group (BT.A) 141.25p 1.00%

Sainsbury (J) (SBRY) 263.40p 1.00%

Diageo (DGE) 2,527.00p 0.98%

International Consolidated Airlines Group SA (CDI) (IAG) 179.55p 0.87%

FTSE 100 - Fallers

DCC (CDI) (DCC) 5,590.00p -1.76%

M&G (MNG) 210.30p -0.76%

Halma (HLMA) 2,632.00p -0.75%

Diploma (DPLM) 4,152.00p -0.72%

BAE Systems (BA.) 1,272.50p -0.59%

Berkeley Group Holdings (The) (BKG) 4,750.00p -0.50%

WPP (WPP) 724.20p -0.41%

Darktrace (DARK) 583.00p -0.41%

Weir Group (WEIR) 1,950.00p -0.41%

Next (NXT) 8,856.00p -0.40%

FTSE 250 - Risers

Pennon Group (PNN) 659.00p 6.46%

Indivior (INDV) 809.50p 3.78%

SDCL Energy Efficiency Income Trust (SEIT) 64.40p 3.54%

RS Group (RS1) 745.50p 3.47%

Morgan Advanced Materials (MGAM) 326.00p 2.03%

PZ Cussons (PZC) 106.60p 1.91%

Bodycote (BOY) 712.00p 1.86%

Rotork (ROR) 340.80p 1.85%

Dr. Martens (DOCS) 74.95p 1.77%

NCC Group (NCC) 155.00p 1.57%

FTSE 250 - Fallers

Moonpig Group (MOON) 191.20p -5.35%

Bytes Technology Group (BYIT) 497.40p -5.08%

Bakkavor Group (BAKK) 145.00p -4.29%

Trustpilot Group (TRST) 228.00p -3.18%

W.A.G Payment Solutions (WPS) 65.80p -2.95%

Supermarket Income Reit (SUPR) 73.80p -2.25%

AO World (AO.) 116.20p -2.19%

CMC Markets (CMCX) 325.00p -2.11%

TBC Bank Group (TBCG) 2,880.00p -2.04%

Tyman (TYMN) 353.00p -1.94%