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London open: Stocks nudge up as UK GDP revised higher
London stocks nudged higher in early trade on Friday following positive US and Asian sessions, as investors mulled an upward revision to UK GDP figures and looked ahead to key US inflation data.
At 0830 BST, the FTSE 100 was up 0.1% at 7,630.98.
Data released earlier by the Office for National Statistics showed that the economy grew a touch in the final quarter of last year, meaning a recession was avoided in the second half.
The GDP figure was revised up from an initial estimate of zero growth to 0.1% growth, following an upwardly-revised 0.1% contraction in the third quarter. The initial estimate had shown a 0.2% contraction in Q3.
GDP for 2022 as a whole is now estimated to have risen by 4.1%, up from a previous estimate of 4%.
The figures showed the quarterly GDP in Q4 was 0.6% below where it was pre-Covid in the fourth quarter of 2019, revised upwards from a previous estimate of 0.8% below.
Darren Morgan, director of economic statistics at the ONS, said: “The economy performed a little more strongly in the latter half of last year than previously estimated, with later data showing telecommunications, construction and manufacturing all faring better than initially thought in the latest quarter.
“Households saved more in the last quarter, with their finances boosted by the government’s energy bill support scheme.
“Meanwhile, the UK’s balance of payments deficit with the rest of the World narrowed, driven by increased foreign earnings by UK companies, particularly in the energy sector.”
Investors were also mulling the latest figures from Nationwide, which showed that house prices fell in March at the fastest annual pace since July 2009.
House prices were down 3.1% on the year following a 1.1% decline in February. On the month, prices fell 0.8% in March following a 0.5% drop the month before. This marked the seventh decline in a row and leaves prices 4.6% below their August peak.
The data showed that house price growth slowed across all UK regions. The West Midlands was the strongest performing region, with prices up 1.4% on the year, while Scotland remained the weakest performer, with prices down 3.1%.
Nationwide chief economist Robert Gardner said: “The housing market reached a turning point last year as a result of the financial market turbulence which followed the mini-Budget. Since then, activity has remained subdued – the number of mortgages approved for house purchase remained weak at 43,500 cases in February, almost 40% below the level prevailing a year ago.
“It will be hard for the market to regain much momentum in the near term since consumer confidence remains weak and household budgets remain under pressure from high inflation. Housing affordability also remains stretched, where mortgage rates remain well above the lows prevailing at this point last year.”
Looking ahead to the rest of the day, US PCE data for February is due at 1330 BST.
CMC Markets analyst Michael Hewson said the Federal Reserve will be hoping that there are signs that inflation is cooling here after the surprise spike to 4.7% in the January numbers, which prompted a sharp spike in US rate hike expectations just prior to the meltdown that we saw at the beginning of this month.
“The jump higher in PCE core deflator also happened to coincide with a surge in January personal spending, which rose 1.8%,” he said.
“Since then, yields have collapsed on concerns over the stability of the banking system, with US 2-year yields set to see their biggest monthly fall since the financial crisis. While personal spending is expected to slow from the 1.8% gain seen in January to 0.3%, the bigger question is whether we’ll see a similar slowdown in headline core PCE, or at the very least that we don’t move higher.”
In equity markets, Rolls-Royce rose after it announced the appointment of BP’s Helen McCabe as its new chief financial officer.
Computacenter gained after it delivered flat annual profit but said revenues in the current year had been “extremely buoyant”.
Ocado advanced after saying late on Thursday that it had “comprehensively won” a patent infringement suit brought by Norwegian warehouse robotics group AutoStore at the UK High Court.
NCC shares crumbled, down 47% after the cyber security firm issued a profits warning, citing a further deterioration in the macro-economic and market environment, including the collapse of Silicon Valley Bank and its impact on customer confidence.
The company now expects group adjusted operating profit to be within a range of £28m to £32m, compared with November forecasts of around £47m.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | +4.15% | +20.80 | 521.80 |
| 2 |  |
International Consolidated Airlines Group S.a. | +2.36% | +3.50 | 152.10 |
| 3 |  |
Pearson Plc | +2.08% | +17.00 | 832.80 |
| 4 |  |
Ocado Group Plc | +2.05% | +10.80 | 538.00 |
| 5 |  |
Burberry Group Plc | +1.53% | +39.00 | 2,580.00 |
| 6 |  |
Coca-cola Hbc Ag | +1.49% | +33.00 | 2,245.00 |
| 7 |  |
Unilever Plc | +1.23% | +51.50 | 4,244.00 |
| 8 |  |
Astrazeneca Plc | +1.15% | +128.00 | 11,294.00 |
| 9 |  |
Diageo Plc | +1.01% | +36.00 | 3,617.00 |
| 10 |  |
Barclays Plc | +0.99% | +1.44 | 146.26 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Tui Ag | -6.49% | -42.60 | 613.80 |
| 2 |  |
Glencore Plc | -1.20% | -5.60 | 461.00 |
| 3 |  |
Antofagasta Plc | -1.08% | -17.00 | 1,564.00 |
| 4 |  |
Ferguson Plc | -1.07% | -115.00 | 10,605.00 |
| 5 |  |
Anglo American Plc | -1.06% | -28.50 | 2,659.00 |
| 6 |  |
Legal & General Group Plc | -0.95% | -2.30 | 239.50 |
| 7 |  |
Persimmon Plc | -0.94% | -12.00 | 1,258.00 |
| 8 |  |
Bp Plc | -0.76% | -3.90 | 509.30 |
| 9 |  |
Croda International Plc | -0.74% | -48.00 | 6,420.00 |
| 10 |  |
Hsbc Holdings Plc | -0.70% | -3.90 | 551.40 |
US close: Stocks rise on hopes of a rate hike pause
Wall Street stocks continued their upward trend by the close on Thursday, as banking concerns showed further signs of easing.
Economic data releases also contributed to sentiment, as a downward revision to GDP and higher-than-expected jobless claims suggested a potential pause in interest rate hikes.
The Dow Jones Industrial Average rose 0.43% to close at 32,859.03, while the S&P 500 gained 0.57% to 4,050.83.
The technology-heavy Nasdaq Composite had the strongest performance, advancing 0.73% to finish at 12,013.47.
In currency markets, the dollar weakened slightly against its European pairs, last falling 0.01% on sterling and the euro to trade at a respective 80.72p and 91.69 euro cents.
It remained relatively stable against the yen, however, at JPY 132.70.
“A rise in jobless claims and lower US fourth quarter GDP growth boosted the hopes of those expecting the Fed to be on pause at its next meeting and beyond,” said IG chief market analyst Chris Beauchamp earlier.
“The dollar index continues to trade in a bearish fashion, and is on the cusp of a break towards the February lows.”
GDP growth revised down as initial jobless claims top forecasts
In economic news, newly released data showed that the country’s economy expanded slightly less than previously estimated in the fourth quarter of 2022.
US gross domestic product (GDP) grew at an annual pace of 2.6%, down from the previous estimate of 2.7%, and the 3.2% growth recorded in the third quarter.
The reduction was mainly due to downward revisions to exports and consumer spending.
“The slight downward revision to fourth quarter GDP shows the economy ended 2022 with marginally less momentum,” said analysts at Oxford Economics.
“Looking ahead, the economy will face the full brunt of tighter credit conditions and Fed policy this year, and inflation is set to stay above its historical trend.”
Oxford said the recent banking sector turmoil would affect the economy, mainly through tighter lending standards and a reduction in the availability of credit.
“We expect a recession to hit in the second half of 2023, with a peak-to-trough GDP decline of around 1.5%.”
Elsewhere, the number of Americans filing for unemployment benefits also increased last week, with initial jobless claims rising by 7,000 to 198,000 in the week ended 25 March, according to the Labor Department.
Although that was slightly above expectations for a figure of 196,000, it remained a historically low level, suggesting a tight labour market.
The four-week moving average, which aims to smooth out week-to-week volatility, increased by 2,000 to 198,250.
Meanwhile, the number of people receiving unemployment insurance rose by 4,000 to 1.68 million during the week ended 18 March.
On a seasonally-unadjusted basis, initial claims increased by 10,906 to 223,913.
EVgo charges ahead while meme pick BBBY tumbles
In equity markets, shares in electric vehicle charging network operator EVgo jumped 22.09% after the company reported better-than-expected financial results.
The firm’s revenue quadrupled and losses were significantly reduced in its latest quarterly figures.
On the downside, streaming hardware maker Roku fell 3.58% after it announced plans to lay off 200 workers and close some office locations.
Meme stock favourite and home goods retailer Bed Bath & Beyond tumbled 26.23% by the close, after it renewed its warning about the possibility of bankruptcy, while its board proposed a fundraising of $300m to shareholders.
Friday newspaper round-up: Virgin Orbit, Morrisons, LME
Britain has joined the 11-member strong Asia-Pacific trade bloc that includes Japan and Australia after nearly two years of negotiations. The deal, part of a push to agree worldwide trade deals after Brexit, secures access for British exporters to 500 million people in the 11-member Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). – Guardian
NatWest and Lloyds are to axe a further 81 bank branches as both announced fresh cuts to their high street networks. Lloyds Banking Group is closing 39 branches – 26 Lloyds Bank outlets, nine Halifax branches and four Bank of Scotland outlets – between July and September this year. NatWest Group said it was shutting 42 branches. – Guardian
Morrisons has pledged to slash its costs by £700m as it grapples with a £5.9bn debt pile and tepid sales. The supermarket is preparing to make changes including cutting down the range of products it manufactures and simplifying routes taken by its delivery vans to save on fuel, all in an effort to cut spending. – Telegraph
Virgin Orbit will lay off 85 per cent of its workforce after the satellite launch business failed to find new funding in the face of a cash crunch. Shares in the group, founded by Sir Richard Branson in 2017, tumbled sharply in out-of-hours trading in New York last night after it announced it would cut 675 jobs “in order to reduce expenses in light of the company’s inability to secure meaningful funding”. – The Times
The London Metal Exchange has unveiled a wide-ranging plan to overhaul its nickel contract as it scrambles to restore trust in its wider metals market after a blow-up last year. The package of measures unveiled by the exchange include a plan to work with the Qianhai Mercantile Exchange, which, like the LME, is owned by Hong Kong Exchanges and Clearing, to develop a China-based spot market for lower-grade nickel. – The Times
