London pre-open: Stocks to drop after US losses; GDP in focus

by | Feb 11, 2022

London stocks were set to drop at the open on Friday following a weak close on Wall Street, as investors digest the latest UK GDP data.
The FTSE 100 was called to open 82 points lower at 7,590.

CMC Markets analyst Michael Hewson said: “In light of yesterday’s sharp falls in the US, it’s likely that we’ll see markets here in Europe open sharply lower, largely as a result of yesterday’s comments from Bullard about an accelerated path for monetary policy tightening.”

On home turf, figures out earlier from the Office for National Statistics showed the economy grew 7.5% last year despite a contraction in December due to Omicron restrictions.

The yearly rebound followed a 9.4% fall in 2020 as the economy was dented by Covid lockdowns and restrictions.

Darren Morgan, director of economic statistics at the ONS, said: “Despite December’s setback, GDP grew robustly across the fourth quarter as a whole with the NHS, couriers and employment agencies all helping to support the economy.

“Overall, GDP in December was in line with its level in February 2020, before Covid-19 struck, while in the fourth quarter as a whole, it was slightly below that of Q4 in 2019.”

In corporate news, British American Tobacco said it would buy back £2bn of shares as the company reported higher annual profit.

Operating profit for the year to the end of December rose to £10.23bn from £9.96bn a year earlier as revenue dipped 0.4% to £25.68bn. On an adjusted basis operating profit rose 5.2% to £11.15bn and revenue increased 6.9% to £25.68bn. BAT increased its dividend by 1% to 217.8p a share and said it would buy back £2bn of shares starting on 14 February and ending no later than 31 December.

Food products group Tate & Lyle reported a rise in revenues in the final three months of 2021 as it reiterated guidance and said it remained on track to create two businesses by the end of March.

The company, which effectively broke itself up last July with the £1.3bn sale of its primary products business, said its continuing operations were now expected to be stronger. Food & Beverages revenue rose 19% and New Products sales soared 54%.

High performance polymers group Victrex said it had made “a solid start” to 2022.

Victrex said first-quarter group revenues were up 9% year-on-year at £74.6m, while group sales volume was 16% higher at 1,025 tonnes. Across its end-markets, Victrex said its electronics, energy and industrial, medical and value added reseller units saw “good year year-on-year growth”.

However, its automotive division’s performance was modestly down year-on-year, reflecting current challenges in the industry.

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