London stocks were still in the red by midday on Monday as investors mulled disappointing UK GDP data.
The FTSE 100 was down 0.3% at 7,647.44 after figures from the Office for National Statistics showed economic growth slowed more than expected in February.
GDP rose just 0.1% on the month, down from 0.8% in January and coming in below consensus expectations of 0.3% growth. That left the economy 1.5% above its pre-coronavirus pandemic level in February 2020.
The services sector grew by 0.2% and was the main contributor to February’s GDP growth. This was partially offset by production, which fell by 0.6% and construction, which dipped 0.1%.
Darren Morgan, director of economic statistics at the ONS, said growth was also held back by a reduction in the NHS Test and Trace and vaccination programmes, which had contributed strongly to GDP at the start of the year.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “It’s little wonder the economy overall is showing signs of stalling from its remarkable pandemic recovery, given the sense of foreboding which arose from mid-February as troops amassed on the Ukraine border and then the commodity shock unleashed by the invasion hit sentiment.
“Despite worries about consumer and company resilience this snapshot is unlikely to push the Bank of England off its path of rate hikes this year. Attempting to tame increasingly wild inflation is still set to be the priority. However, this reading does indicate the UK economy is showing more signs of fragility than the US.
“The saving grace for now are the piles of lockdown savings which many consumers were able to build up during the pandemic and which are now a soft pillow to land on as the headwinds of higher prices whip up, but this cushion flatten as the year progresses. So policymakers are likely to hold off from mirroring the Federal Reserve’s much more aggressive stance in terms of tightening monetary policy.”
Investors were also digesting the latest data out of China, which showed that annual consumer price inflation rose to 1.5% in March from 0.9% the month before, hitting a three-month high and coming in above analysts’ expectations of 1.2%.
In equity markets, Wood Group surged after it said underlying results for FY21 remain in line with the guidance provided on 13 January. The shares also benefited from an upgrade to ‘hold’ from ‘underperform’ at Jefferies.
Information and data company Ascential rose after it confirmed it was considering a break-up of the group. The announcement came after a Sky News report, citing unnamed sources as saying that Ascential, which has a market capitalisation of £1.49bn, is working with investment bankers on plans to demerge its digital operations and list them separately in the US.
Education publisher Pearson was on the front foot after Goldman said in a note on internet and media shares that it was among the most attractive buy-rated names in a stagflationary environment.
Advertising giant WPP was weaker after a downgrade to ‘neutral’ at Goldman Sachs, while Irn-Bru maker AG Barr fizzed higher after an upgrade to ‘buy’ at Berenberg.
Sainsburys was boosted by an upgrade to ‘buy’ at Jefferies, while Aston Martin was under the cosh after Goldman cut its price target on the shares.
Market Movers
FTSE 100 (UKX) 7,647.44 -0.29%
FTSE 250 (MCX) 21,138.41 -0.17%
techMARK (TASX) 4,407.23 -0.14%
FTSE 100 – Risers
Endeavour Mining (EDV) 2,012.00p 2.18%
BAE Systems (BA.) 757.80p 1.91%
Pearson (PSON) 774.80p 1.65%
Flutter Entertainment (CDI) (FLTR) 8,532.00p 1.62%
Fresnillo (FRES) 791.00p 1.57%
Lloyds Banking Group (LLOY) 45.25p 1.50%
Mondi (MNDI) 1,433.00p 1.42%
Sainsbury (J) (SBRY) 249.70p 1.26%
Vodafone Group (VOD) 130.88p 1.24%
Smiths Group (SMIN) 1,430.50p 1.13%
FTSE 100 – Fallers
Prudential (PRU) 1,069.50p -2.99%
Hargreaves Lansdown (HL.) 1,004.00p -2.57%
Experian (EXPN) 2,837.00p -2.41%
Scottish Mortgage Inv Trust (SMT) 950.00p -2.36%
Halma (HLMA) 2,475.00p -2.25%
Ocado Group (OCDO) 1,219.50p -1.97%
Croda International (CRDA) 7,766.00p -1.82%
SSE (SSE) 1,785.50p -1.73%
Burberry Group (BRBY) 1,573.50p -1.72%
Royal Mail (RMG) 325.10p -1.57%
FTSE 250 – Risers
Wood Group (John) (WG.) 171.70p 10.88%
CMC Markets (CMCX) 281.00p 3.12%
QinetiQ Group (QQ.) 326.80p 3.09%
Ascential (ASCL) 340.00p 2.72%
TBC Bank Group (TBCG) 1,178.00p 2.61%
easyJet (EZJ) 536.40p 2.52%
Darktrace (DARK) 448.80p 2.49%
BH Macro Ltd. GBP Shares (BHMG) 4,250.00p 2.04%
Hochschild Mining (HOC) 135.40p 2.03%
Morgan Advanced Materials (MGAM) 304.50p 2.01%
FTSE 250 – Fallers
Polymetal International (POLY) 276.10p -6.72%
Aston Martin Lagonda Global Holdings (AML) 822.20p -5.47%
Baltic Classifieds Group (BCG) 148.20p -4.26%
Fidelity China Special Situations (FCSS) 247.00p -3.89%
Network International Holdings (NETW) 244.20p -3.25%
Kainos Group (KNOS) 1,271.00p -3.12%
AJ Bell (AJB) 312.20p -3.10%
Discoverie Group (DSCV) 763.00p -2.80%
Johnson Matthey (JMAT) 1,910.50p -2.77%
Edinburgh Worldwide Inv Trust (EWI) 212.00p -2.75%
