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London open: FTSE nudges up after stronger-than-expected UK GDP
London stocks nudged higher in early trade on Thursday following better-than-expected UK GDP data, as investors looked ahead to the latest US inflation reading.
At 0850 , the FTSE was up 0.1% at 8,204.48.
Figures released earlier by the Office for National Statistics showed that the economy grew 0.4% on the month in May following a flat reading in April. This was ahead of expectations for 0.2% growth.
Leading the improvement was the construction sector, which grew at its fastest rate in almost a year. It reversed April’s 1.1% slide – when wet weather hit activity – with a 1.9% uplift.
Production output also improved, however, nudging up 0.2% following a 0.9% decline a month earlier. Services growth was unchanged at 0.3%.
In the three months to May, GDP rose by 0.9%, driven by a 1.1% uplift in services output. It was the quickest pace of growth for over two years, the ONS noted.
Liz McKeown, director of economic statistics at the ONS, said: “The economy grew strongly in May, with all three main sectors seeing increases. Many retailers and wholesalers had a good month, with both bouncing back from a weak April.
“Construction grew at its fastest rate in almost a year after recent weakness, with house building and infrastructure projects boosting the industry.”
Capital Economics said the stronger-than-expected rise in GDP in May “will be welcomed by the new Chancellor after announcing earlier this week that she will make kickstarting economic growth a ‘national mission’.
“Indeed, the improving economic outlook suggests the government may benefit from the economic recovery being stronger than most forecasters anticipate.”
Investors were also mulling the latest residential market survey from the Royal Institution of Chartered Surveyors, which showed that house prices were unchanged in June, but optimism sparked across the sector following the general election.
The headline house price balance in the survey was unchanged month-on-month at -17.
The new buyer enquiries balance was also broadly in line with the previous reading, easing just one point to -7. In contrast, newly agreed sales improved to -7 from -13.
However, three-month price expectations stabilised, with a net balance of 5. Prior to June’s survey, the balance had been in contractionary territory for two years.
A net balance of 20 also expect a recovery in residential sales in the near-term, up from 10 in June and the highest level since January 2022.
“These results indicate that respondents have confidence in the newly-elected Labour government, which has voiced a strong commitment to boosting the housing market, aiming to deliver 1.5m homes over the next five years – a figure not hit since the 1960s,” Rics noted.
Looking ahead to the rest of the day, the US consumer price index for June is due at 1330 BST.
In UK equity markets, water companies gained, with Pennon, Severn Trent and United Utilities all higher after regulator Ofwat outlined draft determinations regarding the industry’s five-year investment plans. Both Severn Trent and Pennon noted that the regulator had categorised their business plans as “outstanding”.
Severn Trent was also in focus after a trading statement, while Pennon announced that its chief financial officer Steve Buck was stepping down for personal reasons, to be succeeded by Laura Flowerdew.
RS Group advanced as the industrial maintenance, repair and operation products firm said it continues to expect a stabilisation in trading conditions over the current financial year, after a slight fall in like-for-like sales in the first quarter.
Dr Martens was also trading up as the iconic bootmaker held annual guidance and said trading since the start of the current financial year has been in line with expectations.
On the downside, DCC fell as it reported a “modest” improvement in first-quarter operating profit.
Moonpig slid after a group of investors sold 35m shares in the company in a placing via Citi, JPMorgan and Jefferies, raising proceeds of approximately £61m.
According to terms seen by Bloomberg, Exponent Private Equity, Lexington Partners, Blackstone Group, LGT Capital Partners, GoldPoint, Kaust Investment Management Co, Storebrand International Private Equity & Patria Investments were all involved in the sales.
The sale represents around 10.2% of Moonpig’s issued share capital and the sale price of 175p is a discount of 13.4% to the closing share price on Wednesday.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Severn Trent Plc | +2.67% | +70.00 | 2,687.00 |
| 2 |  |
United Utilities Group Plc | +2.58% | +27.50 | 1,093.50 |
| 3 |  |
Johnson Matthey Plc | +1.99% | +33.00 | 1,690.00 |
| 4 |  |
Crh Plc | +1.77% | +104.00 | 5,996.00 |
| 5 |  |
Ferguson Plc | +1.57% | +230.00 | 14,915.00 |
| 6 |  |
Diageo Plc | +1.54% | +38.50 | 2,541.00 |
| 7 |  |
Sainsbury (j) Plc | +1.46% | +3.80 | 264.60 |
| 8 |  |
Barclays Plc | +1.23% | +2.70 | 222.25 |
| 9 |  |
Itv Plc | +1.21% | +1.00 | 83.50 |
| 10 |  |
Rio Tinto Plc | +1.19% | +62.00 | 5,286.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Dcc Plc | -3.69% | -210.00 | 5,480.00 |
| 2 |  |
Direct Line Insurance Group Plc | -1.31% | -2.60 | 196.60 |
| 3 |  |
Carnival Plc | -1.18% | -15.00 | 1,261.00 |
| 4 |  |
Ocado Group Plc | -0.85% | -3.10 | 359.60 |
| 5 |  |
Halma Plc | -0.79% | -21.00 | 2,631.00 |
| 6 |  |
Berkeley Group Holdings (the) Plc | -0.63% | -30.00 | 4,744.00 |
| 7 |  |
Wpp Plc | -0.58% | -4.20 | 723.00 |
| 8 |  |
Hargreaves Lansdown Plc | -0.55% | -6.00 | 1,090.00 |
| 9 |  |
Barratt Developments Plc | -0.47% | -2.30 | 482.80 |
| 10 |  |
3i Group Plc | -0.37% | -11.00 | 2,969.00 |
US close: Stocks sharply higher as chip stocks rally
Wall Street closed sharply higher on Wednesday after chip stocks delivered solid gains.
At the close, the Dow Jones Industrial Average was up 1.09% at 39,721.36, while the S&P 500 advanced 1.02% to 5,633.91 and the Nasdaq Composite saw out the session 1.18% firmer at 18,647.45.
The Dow closed 429.39 points higher on Wednesday, easily reversing losses recorded in the previous session.
Federal Reserve chairman Jerome Powell told the Senate Banking Committee on Tuesday that reducing policy restraint too late or too little could “unduly weaken” economic activity and employment.
He also told Congress that: “More good data would strengthen our confidence that inflation is moving sustainably toward 2%.” Powell continued his two-day testimony on Wednesday, this time in front of the House Financial Services Committee, with his comments fuelling hopes of an interest rate cut during H2.
On the macro front, mortgage applications dipped 0.2% in the first week of July, according to the Mortgage Bankers Association. Applications to refinance a mortgage fell 2% week-on-week, while applications to purchase a home rose 1% on the previous week.
In the corporate space, chip stocks led Wednesday’s gains, with Taiwan Semiconductor, Qualcomm, Broadcom and Nvidia all trading higher on the session.
Thursday newspaper round-up: Elon Musk, The Body Shop, Telegraph
Popular trader recommendation websites must vet the firms they advertise and tackle fake reviews under new rules designed to protect households from cowboy builders and tradespeople. Nationally, unscrupulous traders cost homeowners about £1.4bn a year, according to trading standards authorities, a problem that is escalating as demand for home improvements, loft conversions and extensions increases. – Guardian
A US court on Wednesday dismissed a lawsuit claiming Elon Musk refused to pay at least $500m in severance to thousands of Twitter employees he fired in mass layoffs after buying the social media company now known as X. US district judge Trina Thompson in San Francisco ruled on Tuesday that the federal Employee Retirement Income Security Act (Erisa) governing benefit plans did not cover the former employees’ claims, and therefore she lacked jurisdiction. – Guardian
British tycoon Mike Jatania is closing in on a deal for The Body Shop, as he moves ahead in the race to rescue what is left of the stricken high street chain. Mr Jatania is understood to be part of a consortium that has entered exclusive talks with administrators overseeing the sale of The Body Shop. His investment firm Aurea Holdings is working on the acquisition alongside Charles Denton, former Molton Brown chief executive, according to sources. – Telegraph
The City regulator is to go ahead with the biggest shake-up of listing rules in three decades in an attempt to help London equity markets attract and retain more companies. The Financial Conduct Authority said loosening rules that govern the rights and information given to shareholders when companies float on the stock market would align “the UK’s regime with international market standards”. – The Times
The Daily Mail owner DMGT has withdrawn from the auction for the Telegraph newspapers amid fears that it would be drawn into a long and complex competition inquiry. The privately owned media group, which is run by Lord Rothermere, is understood to have told bankers overseeing the sale of its decision in recent days. – The Times
