London close: Stocks mixed as UK economy returns to growth

London markets finished with a mixed performance on Wednesday, following a surge on Tuesday, with investors buoyed by news of the UK economy's return to growth in January.

The FTSE 100 index edged up 0.31% to close at 7,772.17 points, while the FTSE 250 slipped 0.01% to settle at 19,563.92 points.

In currency markets, sterling was last up 0.04% on the dollar to trade at $1.2798, while it dipped 0.17% against the euro, changing hands at €1.1688.

“The rebound in Chinese markets is catching the attention this side of the globe, as mining stocks in London lead the way higher,” said IG chief market analyst Chris Beauchamp.

“After huge outflows from Chinese markets over the last year, it looks like investor confidence in the outlook is returning, along with hopes of renewed raw material demand.”

Beauchamp added that sector rotation was continuing across the pond, as the Dow Jones managed to make gains even as the Nasdaq came under some pressure.

“The rally in stocks has moved into a choppier phase, a change from the relentless gains of the fourth quarter of 2023, and the sideways price action could intensify as we begin the run towards next week’s Fed decision.”

UK economy returns to growth in January, eurozone industrial output falls

In economic news, the Office for National Statistics reported that the UK economy returned to growth in January, showing a 0.2% increase in gross domestic product (GDP).

That growth aligned with expectations, following a 0.1% decline in December.

The positive uptick came after the economy contracted 0.3% in the final quarter of 2023, pushing it into a technical recession.

Services output notably contributed to the rise in GDP, expanding by 0.2% in January, according to the ONS.

However, production output declined 0.2%, while construction output showed a notable increase of 1.1%.

“The economy picked up in January with strong growth in retail and wholesaling. Construction also performed well with housebuilders having a good month, having been subdued for much of the last year,” said ONS statistician Liz McKeown.

“These were partially offset by falls in television and film production, lawyers and the often-erratic pharmaceutical industry.

“Over the last three months as a whole, the economy contracted slightly.”

On the continent, eurozone industrial production took a sharp downturn in January, according to fresh data from Eurostat.

Industrial production fell 3.2%, surpassing analyst expectations of a 1.8% decrease.

The decline was more pronounced than the 2.1% drop experienced across the wider European Union.

Year-on-year, industrial production in the euro area and EU fell by 6.7% and 5.7%, respectively.

Ireland notably recorded a significant 29% slump in industrial production month-on-month, contributing to the overall decline.

“A drop in industrial output in January was always likely, as a jump in Irish output in December mean reverted,” said Melanie Debono, senior Europe economist at Pantheon Macroeconomics.

“The Irish figures are moved around violently by transfer pricing practices of multinational firms headquartered there.

“That said, it wasn’t just Irish output that fell in January. Indeed, output slid in all bar eight eurozone economies.”

Across the Atlantic, mortgage applications in the US saw a 7.1% increase in the week ended 8 March , according to the Mortgage Bankers Association of America.

Although it marked a slight cooling from the prior week's 9.7% rise, applications to purchase homes advanced by 4.7%, while those for home loan refinancing jumped 12.2%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances dropped 18 basis points to 6.84%, reaching its lowest level in five weeks.

“Mortgage rates dropped below 7% last week for most loan types because of incoming economic data showing a weaker service sector and a less robust job market, with an increase in the unemployment rate and downward revisions to job growth in prior months,” said MBA chief economist Mike Fratantoni.

Miners in the green, Direct Line falls as it rejects takeover bid

On London’s equity markets, heavily-weighted miners gained, with Antofagasta, Glencore, and Anglo American up 5.28%, 1.75% and 2.88%, respectively.

Flutter Entertainment was boosted 1.39% after receiving an upgrade to 'overweight' from 'neutral' from JPMorgan Cazenove.

Infrastructure company Balfour Beatty jumped 9.48% following its announcement of a dividend increase and a £100m share buyback.

On the downside, South America-focussed Hochschild Mining slipped 0.36% after reporting a 10% drop in production.

Similarly, Ferrexpo faced a downturn of 4.09% after announcing the need for more time to finalise its full-year results due to a legal claim against its unit in Ukraine.

Intellectual property-focussed investor IP Group reported a decrease in net asset value to £1.19bn, down from £1.38bn in 2022, leading to a decline of 6.59% in its share price.

Direct Line Insurance Group also lost ground, dropping by 4.34%, following its rejection of a second takeover approach from Belgian rival Ageas, as the board said it continued to undervalue the company.

Meanwhile, InterContinental Hotels Group experienced a decline of 1.47% after being downgraded to 'hold' from 'buy' at Jefferies.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,772.17 0.31%
FTSE 250 (MCX) 19,563.92 -0.01%
techMARK (TASX) 4,519.02 -0.36%

FTSE 100 - Risers

Antofagasta (ANTO) 1,914.50p 5.31%
Glencore (GLEN) 419.20p 4.81%
Anglo American (AAL) 1,937.00p 4.63%
Entain (ENT) 777.00p 1.92%
CRH (CDI) (CRH) 6,614.00p 1.66%
United Utilities Group (UU.) 1,057.50p 1.59%
BP (BP.) 485.00p 1.58%
Flutter Entertainment (DI) (FLTR) 17,475.00p 1.51%
Endeavour Mining (EDV) 1,473.00p 1.38%
British American Tobacco (BATS) 2,395.50p 1.23%

FTSE 100 - Fallers

Vodafone Group (VOD) 66.52p -4.01%
JD Sports Fashion (JD.) 114.10p -3.22%
Rentokil Initial (RTO) 479.60p -3.07%
Admiral Group (ADM) 2,650.00p -3.04%
Rightmove (RMV) 560.20p -2.91%
St James's Place (STJ) 436.30p -2.52%
Standard Chartered (STAN) 653.20p -2.48%
Hikma Pharmaceuticals (HIK) 1,875.00p -2.24%
InterContinental Hotels Group (IHG) 8,218.00p -2.24%
RS Group (RS1) 715.80p -2.05%

FTSE 250 - Risers

Balfour Beatty (BBY) 372.00p 9.48%
Carnival (CCL) 1,190.50p 5.54%
Moonpig Group (MOON) 179.40p 4.91%
Harbour Energy (HBR) 267.00p 4.83%
Jupiter Fund Management (JUP) 91.80p 3.73%
BH Macro Ltd. GBP Shares (BHMG) 339.50p 2.88%
Breedon Group (BREE) 390.50p 2.76%
Abrdn Private Equity Opportunities Trust (APEO) 533.00p 2.50%
Tullow Oil (TLW) 27.28p 2.48%
Baltic Classifieds Group (BCG) 235.00p 2.40%

FTSE 250 - Fallers

IP Group (IPO) 48.20p -6.59%
Direct Line Insurance Group (DLG) 216.00p -4.34%
Tritax Eurobox (GBP) (EBOX) 53.70p -4.11%
FirstGroup (FGP) 157.00p -3.98%
Ferrexpo (FXPO) 53.00p -3.64%
Abrdn (ABDN) 148.80p -3.53%
Future (FUTR) 592.50p -3.42%
Bridgepoint Group (Reg S) (BPT) 261.40p -3.11%
PureTech Health (PRTC) 195.60p -2.93%
Quilter (QLT) 101.50p -2.68%