London close: Equities fall after worse-than-forecast US GDP slowdown

UK equities dropped after a data showed a worse-than-expected slowdown in US economic growth in the third quarter.

Gross domestic product in the world’s biggest economy rose an annualised 1.5% in the third quarter, marking a considerable easing from the previous quarter’s 3.9% growth and well below analysts’ expectations for a 1.6% gain.

“The slowing had been flagged well in advance by the monthly business surveys and higher frequency data, and is therefore unlikely to have a major impact on policymaking,” said Chris Williamson, chief economist at Markit.

“Instead, the Fed will be firmly focused on how the fourth quarter is playing out, writing off some of the third quarter weakness as temporary.”

The Federal Reserve on Wednesday decided to keep interest rates unchanged, as expected, but kept the door open to an increase in December, downplaying global economic headwinds in its statement on the decision.

In other big data releases on Thursday, US pending home sales fell for the second consecutive month in September. The index from the National Association of Realtors declined 2.3% month-on-month in September compared with a 1.4% decline in the previous month and with analysts’ expectations for a 1% increase.

US jobless claims rose by 1,000 to 260,000 in the week to 24 October, compared with analysts' expectations for a 265,000 reading, the Department of Labor revealed.

UK house prices on the rise

Closer to home, Nationwide revealed UK house prices rose 3.9% in the year to October, compared to expectations for a 3.8% gain in line with the previous month. Compared to a month ago, prices rose 0.6% in October, more than the 0.5% estimated. In contrast, British mortgage approvals declined from 70,664 to 68,874 last month, compared with analysts’ expectations for a 72,500 reading, according to data published by the Bank of England.

Business confidence in the Eurozone beat expectations in October, according to the European Commission. The index monitoring economic confidence in the 19-bloc country rose from 105.6 to 105.9 this month, reaching its highest level since June 2011 and exceeding forecast for a slight decline to 105.1.

German unemployment fell 5,000 in October, more than the 4,000 that was forecast following a revised 1,000 increase in September, Destatis revealed. The unemployment rate remained at 6.4%, as expected.

Meanwhile, according to Germany’s statistical office, the consumer price index rose 0.3% year-on-year last month compared with a flat reading in the previous month and with analysts’ expectations for a 0.2% gain.

Month-on-month, the CPI was also flat from the previous month, compared with analysts’ expectations for a 0.1% decline.

In company news, miners were in negative territory as hints from the Fed about a possible December interest rate hike saw the dollar strengthen and gold prices drop. Randgold, Fresnillo and Anglo American were among the fallers.

Barclays tumbled after reporting a drop in third-quarter pre-tax profit as the cost of claims settlements weighed on results and revenues fell.

Smith & Nephew dropped after posting a drop in third quarter reported revenue on currency headwinds and announcing the acquisition of robotics company Blue Belt Technologies.

Meggitt continued to slide a day after warning that full-year profit will be well below forecasts.

Aviva jumped after Panmure Gordon reiterated its ‘buy’ rating on the insurer and the company reported a 25% increase in new business.

Playtech rallied after the gambling, software and services supplier reported strong trading in both of its divisions in the three months to September.

Merlin Entertainments gained, as analyst suggested last week's news that the company and a Chinese state-backed private equity partner are preparing a joint venture for Legoland Park in Shanghai.

Market Movers

FTSE 100 (UKX) 6,389.07 -0.76%
FTSE 250 (MCX) 17,105.61 -0.22%
techMARK (TASX) 3,082.29 -0.84%

FTSE 100 - Risers

Merlin Entertainments (MERL) 408.40p 2.00%
Hikma Pharmaceuticals (HIK) 2,146.00p 1.85%
Mondi (MNDI) 1,510.00p 1.34%
Next (NXT) 8,000.00p 1.27%
Coca-Cola HBC AG (CDI) (CCH) 1,557.00p 1.10%
Reckitt Benckiser Group (RB.) 6,418.00p 1.07%
Associated British Foods (ABF) 3,507.00p 1.07%
Bunzl (BNZL) 1,836.00p 0.99%
Aviva (AV.) 483.90p 0.94%
SABMiller (SAB) 3,981.50p 0.93%

FTSE 100 - Fallers

Barclays (BARC) 236.20p -6.70%
Meggitt (MGGT) 347.90p -5.20%
Randgold Resources Ltd. (RRS) 4,449.00p -5.06%
Anglo American (AAL) 535.80p -4.83%
Smith & Nephew (SN.) 1,096.00p -4.70%
Fresnillo (FRES) 732.50p -4.62%
Glencore (GLEN) 110.55p -4.24%
BHP Billiton (BLT) 1,051.00p -4.19%
Standard Chartered (STAN) 718.50p -3.35%
Barratt Developments (BDEV) 617.50p -3.21%

FTSE 250 - Risers

Playtech (PTEC) 873.00p 10.16%
Ocado Group (OCDO) 380.00p 5.58%
Allied Minds (ALM) 467.70p 3.93%
Shawbrook Group (SHAW) 345.00p 3.82%
Zoopla Property Group (WI) (ZPLA) 253.90p 3.34%
OneSavings Bank (OSB) 378.90p 2.41%
Petra Diamonds Ltd.(DI) (PDL) 71.65p 2.36%
Henderson Group (HGG) 287.40p 1.95%
Worldwide Healthcare Trust (WWH) 1,833.00p 1.83%
Dignity (DTY) 2,417.00p 1.81%

FTSE 250 - Fallers

Premier Oil (PMO) 68.15p -6.52%
Centamin (DI) (CEY) 64.45p -6.46%
Millennium & Copthorne Hotels (MLC) 488.00p -5.24%
Tullow Oil (TLW) 198.20p -4.85%
Nostrum Oil & Gas (NOG) 433.00p -4.60%
Kaz Minerals (KAZ) 114.20p -4.52%
International Personal Finance (IPF) 374.60p -4.41%
Drax Group (DRX) 256.00p -4.37%
TalkTalk Telecom Group (TALK) 241.40p -4.21%
Elementis (ELM) 225.40p -3.68%