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London open: Stocks edge up as investors mull GDP data; Spirent surges
London stocks edged up in early trade on Thursday, as investors digested data confirming the UK fell into recession in the second half of last year.
At 0820 GMT, the FTSE 100 was up 0.3% at 7,953.44, with trade expected to be quiet as we head towards the long Easter break.
Final figures released earlier by the Office for National Statistics showed that GDP contracted by 0.3% in the last three months of the year, unrevised from an earlier estimate. This followed a 0.1% contraction in the period from July to September.
Chancellor Jeremy Hunt said in response to the data: “Last year was tough as interest rates had to rise to bring down inflation, but we can see our plan is working.
“Inflation has fallen decisively from over 11% to 3.4%, the economy grew in January and real wages have increased for eight months in a row.
“Our cuts to National Insurance will boost growth by rewarding work and putting over £900 a year back into the average earner’s pocket.”
Ashley Webb, UK economist at Capital Economics, said: “Overall, today’s data release does not change much. The UK’s mild technical recession at the end of last year was as mild as previously thought and the economic recovery is probably already underway.
“And our forecast for inflation to fall further than the consensus and for interest rates to be cut faster and further than current market pricing suggests the economic recovery in 2024 and 2025 will be stronger than most expect.”
Looking ahead, Richard Hunter, head of markets at Interactive Investor, said that even though markets will be closed on Friday, the US inflation report will be the subject of close scrutiny.
“The performance of markets over a successful opening quarter to the year has shown that investors are increasingly accepting that three rate cuts are the most likely outcome, rather than the several which had previously been pencilled in,” he said.
“Some of this changing sentiment has come from the realisation that the general strength of the economy has reduced pressure on the Federal Reserve to ease monetary policy and indeed moving too soon to cut rates could do more harm than good in the longer term if they are not currently necessary.”
In equity markets, Spirent Communications surged after Keysight Technologies reached a deal to buy the company for £1.16bn, outbidding US peer Viavi Solutions, which had already agreed to buy the telecoms group earlier this month.
Spirent said it is now recommending a 201.5p-per-share offer from Keysight, which represents a 26.5p or 15% premium to Viavi’s offer.
JD Sports Fashion also racked up strong gains after saying it expects full-year profits to be within guidance of £915m to £935m. It said the current year would be “challenging” due to less product innovation and more discounting, but expects sales to pick up on the back of the Paris Olympics and European football finals in the summer.
Electrical retailer AO World rallied as it said FY24 adjusted pre-tax profit was set to be “at least” at the top end of the previously guided range of £28m to £33m as the core business continued to trade positively in the fourth quarter.
On the downside, M&G, Prudential, Smith & Nephew, Taylor Wimpey, Moneysupermarket.com, Primary Health Properties, Travis Perkins, Ithaca Energy and Hargreaves Lansdown were all weaker as they traded without entitlement to the dividend.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Hsbc Holdings Plc | +1.95% | +12.00 | 627.00 |
| 2 |  |
Direct Line Insurance Group Plc | +1.84% | +3.60 | 199.30 |
| 3 |  |
Flutter Entertainment Plc | +1.82% | +285.00 | 15,960.00 |
| 4 |  |
Fresnillo Plc | +1.51% | +6.90 | 463.90 |
| 5 |  |
Antofagasta Plc | +1.46% | +29.00 | 2,014.00 |
| 6 |  |
Croda International Plc | +1.42% | +69.00 | 4,922.00 |
| 7 |  |
Hikma Pharmaceuticals Plc | +1.38% | +26.00 | 1,906.50 |
| 8 |  |
Wpp Plc | +1.32% | +9.80 | 749.60 |
| 9 |  |
Glencore Plc | +1.29% | +5.55 | 434.30 |
| 10 |  |
Barclays Plc | +1.29% | +2.34 | 183.86 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Smith & Nephew Plc | -3.31% | -34.50 | 1,009.00 |
| 2 |  |
Taylor Wimpey Plc | -2.42% | -3.40 | 136.85 |
| 3 |  |
Ocado Group Plc | -1.56% | -7.30 | 459.20 |
| 4 |  |
Severn Trent Plc | -1.10% | -28.00 | 2,512.00 |
| 5 |  |
Associated British Foods Plc | -0.99% | -25.00 | 2,489.00 |
| 6 |  |
United Utilities Group Plc | -0.96% | -10.00 | 1,035.50 |
| 7 |  |
Carnival Plc | -0.93% | -11.50 | 1,225.00 |
| 8 |  |
Crh Plc | -0.88% | -60.00 | 6,792.00 |
| 9 |  |
Prudential Plc | -0.87% | -6.60 | 749.20 |
| 10 |  |
Smurfit Kappa Group Plc | -0.72% | -26.00 | 3,602.00 |
US close: Stocks recover from three days of losses
Shares on Wall Street showed signs of recovery on Wednesday, with all major indices edging higher amidst low trading volumes following three consecutive down sessions.
The Dow Jones Industrial Average increased 1.22%, closing at 39,760.08 points, while the S&P 500 rose 0.86% to reach 5,248.49 points, and the Nasdaq Composite climbed 0.51% to settle at 16,399.52 points.
In currency markets, the dollar was last up 0.19% on sterling to trade at 79.26p, while it managed gains of 0.13% against the euro to 92.48 euro cents.
However, the greenback weakened slightly against the yen, decreasing 0.03% to change hands at JPY 151.29.
“The Dow charged out of the gate this afternoon but has slowed after a couple of hours, but tech stocks have continued to struggle,” said IG chief market analyst Chris Beauchamp earlier.
“Quarter-end and Friday’s inflation reading are likely to keep any bullishness in check, but the fundamentals point towards further gains in April and beyond.”
President Xi in talks with US business leaders, Japanese yen slides
In economic news, Chinese president Xi Jinping engaged in talks with US business leaders on Wednesday, a push to enhance bilateral relations.
The talks were reportedly to encourage investment in China, with Xi expressing his view that there was no necessity for the economies of the two nations to separate.
Elsewhere, Japanese finance minister Shunichi Suzuki raised concerns about foreign exchange dynamics overnight as the yen touched its lowest levels in 34 years.
Market commentary suggested that surpassing the JPY 152 mark could precipitate a swift depreciation of the yen’s value.
Trump Media continues surge, GameStop tumbles
In equity markets, Trump Media & Technology Group surged 14.19%, as the upward momentum continued from the stock’s prior day flotation.
Merck & Co added 4.96% after FDA’s approval of its treatment for pulmonary arterial hypertension.
Johnson & Johnson managed a modest rise of 1.41%, after reports from the Wall Street Journal indicated that the company was engaged in discussions regarding the potential acquisition of Shockwave Medical.
On the downside, meme stock GameStop slid 15.03%.
The video game retailer’s shares plummeted following a reported 19% drop in fourth-quarter sales to $1.79bn.
Thursday newspaper round-up: Energy prices, national wage, Thames Water
Millions of households are being urged to submit meter readings to their energy supplier this weekend to ensure they do not overpay when cheaper prices come in on Monday. The consumer champion Martin Lewis is among those urging people to get their phones, pens and notepads out so that they benefit fully from the 12.3% cut to the Ofgem energy price cap, which is altered quarterly. – Guardian
The world’s fossil-fuel producers are on track to nearly quadruple the amount of extracted oil and gas from newly approved projects by the end of this decade, with the US leading the way in a surge of activity that threatens to blow apart agreed climate goals, a new report has found. There can be no new oil and gas infrastructure if the planet is to avoid careering past 1.5C (2.7F) of global heating, above pre-industrial times, the International Energy Agency (IEA) has previously stated. Breaching this warming threshold, agreed to by governments in the Paris climate agreement, will see ever worsening effects such as heatwaves, floods, drought and more, scientists have warned. – Guardian
Pensioners will be just £20 better off in real terms this year after their triple lock increase was all but wiped out by Jeremy Hunt’s stealth tax raid, a leading think tank has said. An 8.5pc rise in the state pension will leave retirees £190 better off in the next tax year after adjusting for higher prices, the Resolution Foundation said. – Telegraph
The national living wage should be paid to all over-18s instead of starting at 21, the independent body behind the policy has said, in a move that would cost businesses tens of millions of pounds. According to the Low Pay Commission (LPC), at almost £3 an hour, the gap between the amount paid to 18-20-year-olds and older adults has widened to an unfair level. – Telegraph
The directors of Thames Water were locked in crisis talks on Wednesday night ahead of an investors’ meeting to discuss plans to inject funds into the company to secure its survival. The board of Britain’s biggest water company were debating its financial future after months of talks involving debt and equity investors, lenders, regulators and government officials, according to Sky News. An announcement is expected as early as Thursday. – The Times
