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London open: Stocks fall as UK economy stagnates
London stocks fell in early trade on Monday as data showed the UK economy stalled in the third quarter.
At 0840 GMT, the FTSE 100 was down 0.2% at 8,066.81.
Revised figures released by the Office for National Statistics showed the economy flatlined in Q3, down from a previous estimate of 0.1% growth.
The ONS also revised its estimate for growth in April to June to 0.4%, down from 0.5% initially estimated.
The figures showed there was no growth in the services sector in the latest quarter, while a 0.7% increase in construction was offset by a 0.4% fall in production.
Liz McKeown, director of economic statistics at the ONS, said: “The economy was weaker in the second and third quarters of this year than our initial estimates suggested with bars and restaurants, legal firms and advertising, in particular, performing less well.
“The household saving ratio fell a little in the latest period, though remains relatively high by historic standards. Meanwhile real household disposable income per head showed no growth.”
Paul Dales, chief UK economist at Capital Economics, said: “Overall, these data suggest that after a bumper first half of the year, the economy ground to a halt in the second half of the year due to a combination of the lingering drag from higher interest rates, weaker overseas demand and some concerns over the policies in the Budget.
“Our hunch is that 2025 will be a better year for the economy than 2024. But more recent data suggest the economy doesn’t have much momentum as the year comes to a close.”
In equity markets, news was thin on the ground, but insurer Direct Line jumped after agreeing to be bought by rival Aviva for £3.75bn.
The offer values each Direct Line Share at 275p, a premium of 73.3% to the closing price of 158.7p on 27 November.
Aviva said it plans to achieve annual pre-tax cost savings of at least £125m through job cuts, “economies of scale and increased efficiency”.
Matt Britzman, senior equity analyst at Hargreaves Lansdown, said: “Christmas has come early for Direct Line investors, as Aviva’s £3.7bn buyout has officially been signed, sealed, and delivered. The terms of the deal remain unchanged from what was floated to the markets earlier this month, and the festive confirmation has wrapped up what many investors had already baked into expectations, leaving little surprise under the tree.
“This deal strikes a balance that seems to deliver value for both parties. Direct Line has been navigating choppy waters, with its market share steadily eroding and a history of missteps from previous management leaving the ship off course. While the new management team has been working to steady the vessel, even they couldn’t deny that Aviva’s offer was the golden ticket they’d struggle to replicate on their own. Though they’ve expressed confidence in their independent strategy, this proposal was simply too compelling to pass up.
“For Aviva, the price tag is sitting on the edge of what might be considered a bargain, but the strategic potential could prove to be a real cracker. Acquiring Direct Line cements Aviva’s status as the heavyweight champion in the UK home and motor insurance markets. Beyond bolstering their market dominance, the deal unlocks opportunities to put the Direct Line transformation on the fast track, while capitalizing on the efficiency gains that come with increased scale. It’s a bold move that could turn out to be a gift that keeps on giving.”
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +2.17% | +41.00 | 1,928.00 |
| 2 |  |
Smurfit Westrock Plc | +1.45% | +60.00 | 4,205.00 |
| 3 |  |
South32 Limited | +1.38% | +2.30 | 168.70 |
| 4 |  |
Bae Systems Plc | +1.17% | +13.50 | 1,169.50 |
| 5 |  |
Astrazeneca Plc | +1.01% | +104.00 | 10,360.00 |
| 6 |  |
Standard Chartered Plc | +0.99% | +9.60 | 981.60 |
| 7 |  |
Wise Plc | +0.96% | +10.00 | 1,047.00 |
| 8 |  |
Rolls-royce | +0.66% | +3.80 | 579.20 |
| 9 |  |
Pershing Square Holdings Ltd | +0.65% | +24.00 | 3,730.00 |
| 10 |  |
Ferguson Enterprises Inc. | +0.64% | +90.00 | 14,060.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | -1.37% | -5.00 | 359.50 |
| 2 |  |
Wpp Plc | -1.18% | -9.80 | 823.40 |
| 3 |  |
Rightmove Plc | -1.16% | -7.60 | 648.40 |
| 4 |  |
Diploma Plc | -1.12% | -48.00 | 4,256.00 |
| 5 |  |
Ashtead Group Plc | -1.11% | -56.00 | 4,974.00 |
| 6 |  |
Auto Trader Group Plc | -1.09% | -8.60 | 778.20 |
| 7 |  |
Rentokil Initial Plc | -1.05% | -4.20 | 395.40 |
| 8 |  |
Relx Plc | -0.96% | -35.00 | 3,594.00 |
| 9 |  |
Segro Plc | -0.89% | -6.20 | 689.40 |
| 10 |  |
Intermediate Capital Group Plc | -0.88% | -18.00 | 2,032.00 |
US close: Stocks higher following November PCE reading
Wall Street stocks closed higher on Friday as the blue-chip clawed back some of this week’s heavy losses.
At the close, the Dow Jones Industrial Average was up 1.18% at 42,840.26, while the S&P 500 advanced 1.09% to 5,930.85 and the Nasdaq Composite saw out the session 1.03% firmer at 19,572.60.
The Dow closed 498.02 points higher on Friday, building on modest gains recorded in the previous session.
Friday’s primary focus was November’s personal consumption expenditures index, which revealed Americans continued to spend at a steady clip last month, while prices rose slightly less than anticipated. According to the Department of Commerce, in seasonally adjusted terms, personal incomes rose at a month-on-month clip of 0.3% during November, while personal spending increased by 0.4%. On the inflation front, the annual rate of increase in the price deflator for personal consumption expenditures ticked higher from 2.3% to 2.4%. Core PCE prices meanwhile were steady at 2.8% year-on-year (consensus: 2.9%).
Elsewhere on the macro front, Consumer confidence in the US rose modestly, although inflation expectations were mixed, the results of a closely followed survey revealed. A final reading on the University of Michigan‘s consumer confidence index for the month of December came in at 74.0, which was up from 71.8 one month before – in line with a preliminary reading and consensus forecasts.
Also drawing some investor attention, the yield on the benchmark 10-year Treasury note was more than five basis points lower at 4.519% after breaking above the 4.5% barrier earlier in the week.
Monday newspaper round-up: business activity, exporters, Donald Trump
British firms are predicting a sharp fall in business activity in the new year, in the latest economic snapshot to warn of an increasingly gloomy outlook for the UK in 2025. The growth indicator survey from the Confederation of British Industry (CBI) indicates firms are preparing to cut down on hiring and reduce output over the next three months. – Guardian
Many exporters are still struggling with post-Brexit trading rules, the British Chambers of Commerce (BCC) has said, as it urges the government to press ahead with an EU “reset” in the new year. In a survey of more than 1,000 of its member companies, the BCC found just 15% said the trade and cooperation agreement (TCA) with the EU, signed by Boris Johnson on Christmas Eve 2020, had helped them to grow sales with the EU. – Guardian
Donald Trump has threatened to retake control of the Panama Canal unless “rip-off” transit fees are reduced for US ships. In social media posts, the president-elect said the 51-mile waterway was vital to America’s economic and security interests but was being run in a “very unfair and injudicious way”. – Telegraph
Sir Chris Hohn, the billionaire hedge fund manager, awarded himself a £42 million dividend this year — down dramatically from the £275 million he collected in 2023 as TCI Fund Management made charitable donations of £340 million. Hohn, 58, received the $53 million payout in the year to the end of March, according to accounts filed at Companies House. – The Times
A former adviser to a UK prime minister has been accused of involvement in a $250 million bribery case. The British executive is described as a co-conspirator in the US Department of Justice’s prosecution of Gautam Adani, one of the richest men in Asia. Adani, an Indian billionaire and founder of the multinational conglomerate Adani Group, was charged in November by a New York court for his role in an alleged conspiracy to bribe Indian officials to win valuable energy contracts. – The Times
