London close: Stocks finish higher even after GDP data

London stocks remained just above the waterline by the close on Friday, despite the release of dire UK GDP data and concerns about a second wave of coronavirus infections, following heavy losses in the previous session.

The FTSE 100 ended the session up 0.47% at 6,105.18, and the FTSE 250 was 0.61% firmer at 17.077.34.

Sterling was weaker against both of its major trading pairs, falling 0.54% against the dollar to $1.2534 and losing 0.13% on the euro to €1.1140.

Data released earlier by the Office for National Statistics showed the economy contracted by a record 20.4% on the month in April.

That followed a 5.8% drop in March and was worse than the 18.4% decline expected by economists, and also marked the worst monthly fall since records began in 1997.

Manufacturing production fell 24.3% in April, while industrial production was down 20.3%.

Construction output slid 40.1% and services production was 19% lower. All four sectors suffered their worst monthly falls since their series began.

“April’s fall in GDP is the biggest the UK has ever seen, more than three times larger than last month and almost ten times larger than the steepest pre-Covid-19 fall," said Jonathan Athow, deputy national statistician for economic statistics at the ONS.

"In April the economy was around 25% smaller than in February."

IG’s chief market analyst Chris Beauchamp said next week would see investors focus on what the Bank of England can do to prop up risk appetite, with hope riding on a “hefty increase” in the UK’s own quantitative easing programme.

“Today’s GDP reading, incomplete though it may be, underscores the need for a big response.

“An extra £100bn probably won’t cut it, but a hefty commitment to do more would likely satisfy the sterling bulls.

“Andrew Bailey will have seen the market reaction to Powell this week and will be keen to avoid a similar fate.”

Despite the positive tone in markets, concerns about a second wave of coronavirus infections - which meant US stocks suffered their worst fall in 12 weeks on Thursday - continued to play on investors' minds.

“Markets appear to have stabilised after yesterday’s crash in global equities, with traders attempting to figure out whether this is finally the beginning of the second major selloff,” said IG analyst Joshua Mahony.

“We appear to be shifting from a phase where everyone looks towards the reopening as a cause for optimism, to one where we begin to refocus on Covid case numbers with trepidation.

“The gains we are seeing today highlight the fact that a second wave still remains far from guaranteed, yet we are certainly likely to see volatility and market sensitivity pick up in the coming weeks as Covid cases roll in.”

He added that a rise in coronavirus cases in US states such as Florida, Texas, California, Nevada, and North Carolina provide a potential warning sign for nations hoping to loosen restrictions.

In equity markets, education publisher Pearson closed up 11.7% amid reports it’s in talks with Cevian Capital after the activist investor took a 5.4% stake in the company.

Travel stocks were also in the black after falling sharply on Thursday, with cruise operator Carnival up 6.64%, budget airline easyJet rising 5.89%, British Airways parent IAG ascending 4.79% and InterContinental Hotels ahead 1.72%.

Events and publishing company Informa gained 6.08% after it warned revenue was likely to fall by almost a third in 2020, but indicated prospects were brightening as business started to revive in China.

Miniature wargames manufacturer Games Workshop surged 8.73% after saying that its recovery since reopening was better than expected and that full-year profit and sales were set to be ahead of 2019.

Precious metals miners Fresnillo reversed earlier losses to close up 2.32%, while Polymetal remained in the red, falling 0.72%.

Both were in the green on Thursday, as gold prices rallied on the back of dovish outlook comments from the US Federal Reserve.

Market Movers

FTSE 100 (UKX) 6,105.18 0.47%
FTSE 250 (MCX) 17,077.34 0.61%
techMARK (TASX) 3,664.48 -0.31%

FTSE 100 - Risers

Pearson (PSON) 573.00p 11.70%
Centrica (CNA) 43.16p 7.58%
Melrose Industries (MRO) 119.15p 6.66%
Carnival (CCL) 1,261.00p 6.64%
Informa (INF) 460.60p 6.08%
easyJet (EZJ) 805.00p 5.89%
International Consolidated Airlines Group SA (CDI) (IAG) 275.50p 4.79%
Land Securities Group (LAND) 619.80p 4.56%
ITV (ITV) 78.70p 3.55%
Standard Chartered (STAN) 425.10p 3.12%

FTSE 100 - Fallers

BAE Systems (BA.) 504.80p -2.28%
Rentokil Initial (RTO) 480.40p -1.82%
London Stock Exchange Group (LSE) 7,950.00p -1.63%
Rightmove (RMV) 558.00p -1.37%
Sainsbury (J) (SBRY) 194.75p -1.34%
Halma (HLMA) 2,185.00p -1.31%
Aveva Group (AVV) 3,866.00p -1.27%
Intertek Group (ITRK) 5,262.00p -1.27%
WPP (WPP) 617.20p -1.15%
Spirax-Sarco Engineering (SPX) 9,578.00p -1.05%

FTSE 250 - Risers

Games Workshop Group (GAW) 7,720.00p 8.73%
Aston Martin Lagonda Global Holdings (AML) 71.10p 8.55%
Airtel Africa (AAF) 56.30p 7.65%
Forterra (FORT) 215.00p 6.44%
Wood Group (John) (WG.) 206.60p 5.98%
Safestore Holdings (SAFE) 697.50p 5.60%
Mitchells & Butlers (MAB) 215.00p 5.47%
Cineworld Group (CINE) 76.66p 5.39%
B&M European Value Retail S.A. (DI) (BME) 372.00p 5.32%
Great Portland Estates (GPOR) 660.20p 4.83%

FTSE 250 - Fallers

Helios Towers (HTWS) 165.40p -13.04%
PureTech Health (PRTC) 250.00p -6.23%
Allianz Technology Trust (ATT) 2,040.00p -3.77%
Centamin (DI) (CEY) 161.45p -3.67%
Brewin Dolphin Holdings (BRW) 266.00p -3.27%
Cairn Energy (CNE) 116.40p -3.08%
St. Modwen Properties (SMP) 334.50p -2.90%
Essentra (ESNT) 303.00p -2.88%
BMO Global Smaller Companies (BGSC) 111.80p -2.78%
Biffa (BIFF) 205.00p -2.61%