London stocks had pared earlier small losses to trade flat by midday on Friday, while sterling was weaker as investors digested disappointing UK growth figures.
The FTSE 100 was steady at 7,322.65, while the pound was 0.2% lower versus the dollar at 1.3199, nearing a one-year low after data from the Office for National Statistics showed the economy barely grew in October as the post-pandemic recovery stalled.
GDP grew just 0.1%, coming in weaker than expectations for 0.4% growth and leaving the economy 0.5% below pre-pandemic February 2020 levels.
The small growth in GDP was driven mostly by a rise in face-to-face GP appointments and solid demand for second-hand cars. The services sector expanded by 0,4%, taking it back to pre-pandemic levels for the first time. However, the manufacturing sector was flat and construction fell 1.8% amid a shortage of materials.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “Although a rate rise can’t be completely ruled out next week, most bets are off that the Bank will push them up so soon, given this latest downbeat reading and the fact that the Omicron variant is still an unknown quantity in terms of the extra pressure it will put on the health service.
“A rate rise in February is more likely to be on the table, as the inflation kettle is set to be whistling loudly by then. That is unless restrictions are ramped up dramatically, pushing the economy into an even tighter recovery position.”
Looking ahead to the rest of the day, investors will be eyeing the release of the latest US inflation figures at 1330 GMT.
Neil Wilson, chief market analyst at Markets.com, said: “Joe Biden told Americans on Thursday that the cost of goods and energy is starting to ease, but this wouldn’t necessarily be reflected in today’s CPI inflation data. From this we can assess that the number is going to be high, very high. The CPI is expected to hit a 40-year high and rise by 6.8% in November, +0.7% month-on-month.
“That would mark a sharp acceleration from October’s 6.2% print – the highest in over 30 years. Given Biden’s comments, 7% is not out of the realms of possibility. Such a number piles pressure on the Fed to accelerate its tapering of asset purchases – I expect it to confirm this at the FOMC meeting next week. Markets are already pricing for potentially three rate hikes next year, so a hawkish Fed is already discounted.”
In equity markets, Associated British Foods ticked up after it said Primark trading for the year to date has been ahead of expectations, with improved like-for-like sales compared to the fourth quarter of its last financial year, but warned of increasing Covid cases hitting stores in Europe.
Housebuilder Berkeley Group rallied after price target upgrades at Citigroup, Barclays and JPMorgan.
Market Movers
FTSE 100 (UKX) 7,322.65 0.02%
FTSE 250 (MCX) 23,063.24 -0.37%
techMARK (TASX) 4,443.70 -0.48%
FTSE 100 – Risers
British American Tobacco (BATS) 2,759.50p 2.55%
Berkeley Group Holdings (The) (BKG) 4,818.00p 1.69%
Phoenix Group Holdings (PHNX) 656.80p 0.95%
Land Securities Group (LAND) 758.00p 0.93%
London Stock Exchange Group (LSEG) 6,702.00p 0.90%
Barclays (BARC) 184.48p 0.90%
BHP Group (BHP) 2,150.00p 0.82%
Aviva (AV.) 396.60p 0.79%
Royal Dutch Shell ‘B’ (RDSB) 1,678.20p 0.74%
M&G (MNG) 197.05p 0.72%
FTSE 100 – Fallers
Darktrace (DARK) 405.60p -2.12%
Kingfisher (KGF) 334.50p -2.02%
Aveva Group (AVV) 3,246.00p -1.96%
Entain (ENT) 1,651.00p -1.93%
JD Sports Fashion (JD.) 221.00p -1.78%
Scottish Mortgage Inv Trust (SMT) 1,398.00p -1.72%
AstraZeneca (AZN) 8,236.00p -1.51%
Rentokil Initial (RTO) 626.40p -1.42%
Next (NXT) 8,326.00p -1.19%
Hikma Pharmaceuticals (HIK) 2,215.00p -1.16%
FTSE 250 – Risers
Dr. Martens (DOCS) 405.00p 3.85%
Just Group (JUST) 83.20p 2.53%
FirstGroup (FGP) 98.30p 2.50%
Rank Group (RNK) 146.40p 2.23%
National Express Group (NEX) 236.60p 2.07%
Hammerson (HMSO) 33.56p 1.64%
Greencore Group (CDI) (GNC) 135.80p 1.57%
Ibstock (IBST) 193.80p 1.52%
International Public Partnerships Ltd. (INPP) 169.00p 1.32%
Cairn Energy (CNE) 186.80p 1.30%
FTSE 250 – Fallers
Harbour Energy (HBR) 363.20p -4.32%
Cineworld Group (CINE) 48.28p -3.17%
888 Holdings (888) 303.60p -2.82%
Synthomer (SYNT) 406.60p -2.59%
Biffa (BIFF) 356.50p -2.33%
Edinburgh Worldwide Inv Trust (EWI) 306.00p -2.24%
Balfour Beatty (BBY) 247.60p -2.06%
Liontrust Asset Management (LIO) 2,220.00p -1.99%
Games Workshop Group (GAW) 9,515.00p -1.96%
Baillie Gifford US Growth Trust (USA) 329.00p -1.94%
