London pre-open: Stocks set to slip despite positive UK GDP data

by | Aug 11, 2023

(Sharecast News) – London’s stocks were expected to slip in early trading on Friday despite data showing that the UK economy expanded at a faster-than-forecast rate in the second quarter.
The Office for National Statistics revealed that UK GDP rose by 0.2% between April and June, with growth picking up slightly from the 0.1% rate experienced in the first three months of the year. Economists had pencilled in now growth quarter-on-quarter.

“Contrary to a lot of expectations economic activity has managed to hold up reasonably well, despite soaring inflation which has weighed on demand, and especially on the more discretionary areas of the UK economy,” said Michael Hewson, chief market analyst at CMC Markets UK.

Futures on the FTSE 100 were pointing to a 0.6% drop on the benchmark index early on to 7,575, more than wiping out the 0.4% gain made the day before.

Stocks across Europe and Wall Street closed higher on Thursday after US consumer price data showed that inflation stayed steady at just 0.2% month-on-month in July. The data, which was in line with economists’ expectations, raised hopes that the Federal Reserve would hold back from hiking interest rates further at its next meeting in September.

All eyes now turn to the release of the US producer price index due out at 1330 BST.

Back in the UK, Wheaton Precious Metals Corp reported a 12.5% decline in second-quarter revenues to $265m, and a 5.1% drop in net earnings to $141.4m. Operating cash flows behaved better, dipping by just 1.9% to $202.4m. The precious metals streaming company however saw gold output rise by 28.1% to 85,083 oz., although silver production shrank by 32% to 4,417 oz. Wheaton did nevertheless reiterate its full-year production guidance. Its cash balance at period end stood at $829m with no debt. An interim dividend of 15 US cents per share was declared.

GCP Infrastructure Investments announced a proposed combination with GCP Asset Backed Income Fund (GABI), that would result in the transfer of GABI’s assets to GCP Infra in exchange for new GCP Infra shares to GABI shareholders. The company’s board said it was also in discussions for a potential combination with RM Infrastructure Income. Following completion of the GABI scheme, GCP Infra said it planned to increase returns to shareholders, reduce its leverage, and shift its investment policy to focus on sustainable assets.

EMIS Group’s plans to be taken private got the go-ahead this morning, as the Competition and Markets Authority (CMA) provisionally approved its acquisition. On 17 June last year, the boards of Bordeaux UK Holdings II (Bidco) and EMIS agreed on terms for Bidco to acquire all of EMIS’ ordinary share capital, which the UK’s CMA referred for a phase two investigation. Bidco and EMIS said they would now await the CMA’s final decision after the public consultation, expected by 5 October.

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