London close: Stocks mixed on tsunami of updates, US GDP data

London stocks closed with mixed results on Thursday as investors processed faster-than-anticipated economic growth in the United States, following a heavy flow of corporate announcements earlier in the day.

The FTSE 100 rose by 0.4%, closing at 8,186.35 points, while the FTSE 250 fell 0.32%, ending the session at 20,884.35 points.

In currency markets, sterling was last down 0.2% on the dollar, trading at $1.2881, while it dropped 0.39% against the euro to last change hands at €1.1861.

“Most indices are still lower this afternoon, though another 1% rise for the Russell 2000 on Wall Street shows that last week’s rotation is still going on beneath the surface,” said IG chief market analyst Chris Beauchamp.

“All eyes are on the ‘Magnificent Seven’ and USD-JPY, both viewed as the main culprits of the recent selloff.

“While buying the dip in these two markets has paid off handsomely so far this year, but with a Fed meeting and tech earnings on next week’s calendar, the risk of renewed volatility is very high.”

Beauchamp added that China’s central bank continued to deliver surprises in the form of rate cuts, although they had not been well-received, which he described as a “salutary lesson” for those hoping for Fed easing in the near future.

“For now, concerns about China’s economy appear relatively contained, but investors remain on edge.”

US economy grows more than expected, initial jobless claims fall

In economic news, the US economy grew at a faster pace than anticipated in the second quarter, with the gross domestic product (GDP) increasing by 2.8% on an annualised basis, according to the US Department of Commerce.

That growth rate surpassed the 1.4% expansion seen in the first quarter and topped economists' predictions for a 2.0% increase.

The acceleration was driven by an 8.4% rise in private investment, particularly an 11.6% surge in equipment spending.

Household consumption also picked up, growing by 2.3% compared to 1.5% in the previous quarter.

Public sector spending increased by 3.1%, while inventory accumulation contributed 0.82 percentage points to overall growth.

However, net trade detracted 0.72 percentage points as imports surged by 6.9%.

The personal consumption expenditures price deflator, a key inflation measure, slowed to a 2.9% increase from 3.7% in the first quarter.

“The sharper-than-expected pick-up in second-quarter GDP growth to 2.8% annualised should make the Fed a bit more comfortable about keeping policy unchanged next week, but the recent loosening of labour market conditions and signs of slower price growth still mean that there is a strong case for a cut at the following meeting in September,” noted Stephen Brown, deputy chief North America economist at Capital Economics.

Initial unemployment claims in the US meanwhile fell more than expected in the week ended 20 July, according to the Labor Department.

Claims dropped by 10,000 to 235,000, below the forecasted 238,000 and down from the previous week’s revised figure of 245,000.

Despite the decline, the current level of claims remains higher than the year-to-date average, indicating a slight softening in the labour market since its post-pandemic peak.

Continuing claims decreased by 9,000 to 1.85 million, while the four-week moving average edged up slightly by 250 to 235,500.

On a non-seasonally adjusted basis, claims fell by 55,502 to 225,090, with significant reductions in New York and Michigan.

On home shores, car production in the UK dropped in June as manufacturers adjusted their production lines for new electrified models, reported the Society of Motor Manufacturers and Traders (SMMT).

The total number of cars produced fell by 26.6% year-on-year to 62,231 units.

Year-to-date production also saw a decline of 7.6%, totaling 416,074 vehicles, primarily due to a 13.9% decrease in cars manufactured for export.

Finally on data, German business sentiment worsened unexpectedly in July, according to the Ifo Institute's latest survey.

The business climate index fell to 87.0 from 88.6 in June, contrary to expectations of a rise to 88.9.

Ifo’s current conditions index dropped to 87.1 from 88.3, and the expectations index decreased to 86.9 from 88.8, reflecting growing pessimism among German businesses.

Centrica slides, Unilever jumps after deluge of corporate news

On London’s equity markets, Centrica plummeted 8.05% after the British Gas owner announced an extension of its share buyback programme but revealed a significant drop in first-half profits.

For the six months ended 30 June, adjusted operating profit decreased to £1.04bn from £2.08bn a year earlier, while pre-tax profit fell to £1.1bn from £2.07bn.

British Gas Energy's adjusted operating profit notably dropped to £159m from £969m.

Rentokil Initial and Airtel Africa also suffered, declining by 5.15% and 7.04%, respectively, following their earnings reports.

AstraZeneca fell 2.39% despite raising its full-year guidance and reporting an 18% increase in first-half revenue to $25.6bn, driven by growth in product sales and alliance revenue.

BT Group edged down 0.89% after reaffirming its full-year targets, citing strong growth in fibre and customer numbers but noting weaker performance in its business division.

Centamin dropped 6.34%, and ITV slid 3.91% after both companies released their results.

Howden Joinery Group lost 3.75%, with its decline coming after only a slight rise in interim profits amid “challenging” UK market conditions.

On the upside, Unilever jumped 6.14% despite reporting worse-than-expected second-quarter underlying sales, and CMC Markets managed to reverse earlier losses, closing up 0.83%.

Lloyds Banking Group rose 1.64%, also recovering from earlier declines even after it reported a 14% drop in first-half statutory pre-tax profit to £3.32bn, due to lower net interest income and higher operating expenses.

British American Tobacco gained 5.24%, after outperforming expectations with its first-half profits.

Fellow cigarette peddler Imperial Brands also saw an increase, of 0.58%.

Opioid addiction treatment specialist Indivior soared 19.08% following the announcement of a $100m share buyback programme and alignment of second-quarter results with updated guidance.

Relx advanced 2.9%, buoyed by robust first-half results and a positive full-year outlook.

Anglo American rose 1.94% despite taking an additional $1.6bn write-down on its British fertiliser project in North Yorkshire.

IG Group Holdings climbed 3.96% even after reporting a decline in full-year profits and revenue, attributed to reduced trading activity.

The company noted a 7% drop in adjusted pre-tax profit to £456.3m and a 3% decrease in total revenue to £987.3m.

Tate & Lyle ended up 1.56%, supported by its affirmation of a positive full-year outlook and a strong start to the new financial year.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,186.35 0.40%
FTSE 250 (MCX) 20,884.35 -0.32%
techMARK (TASX) 4,752.85 0.02%

FTSE 100 - Risers

Unilever (ULVR) 4,671.00p 6.23%
British American Tobacco (BATS) 2,713.00p 5.32%
easyJet (EZJ) 457.70p 3.86%
Imperial Brands (IMB) 2,152.00p 3.16%
Relx plc (REL) 3,583.00p 2.90%
Haleon (HLN) 348.30p 2.53%
Vodafone Group (VOD) 72.14p 2.41%
Anglo American (AAL) 2,265.00p 1.94%
Burberry Group (BRBY) 717.20p 1.79%
Lloyds Banking Group (LLOY) 60.64p 1.64%

FTSE 100 - Fallers

Centrica (CNA) 130.30p -8.91%
Airtel Africa (AAF) 106.90p -7.04%
Pershing Square Holdings Ltd NPV (PSH) 3,830.00p -6.45%
Fresnillo (FRES) 584.50p -3.71%
Rolls-Royce Holdings (RR.) 431.00p -2.91%
Intermediate Capital Group (ICG) 2,064.00p -2.64%
SSE (SSE) 1,802.50p -2.49%
Reckitt Benckiser Group (RKT) 4,383.00p -2.45%
Flutter Entertainment (DI) (FLTR) 14,975.00p -2.44%
Informa (INF) 860.60p -2.00%

FTSE 250 - Risers

Indivior (INDV) 961.50p 16.12%
IG Group Holdings (IGG) 897.00p 6.15%
Ocado Group (OCDO) 425.50p 3.50%
Crest Nicholson Holdings (CRST) 262.40p 3.47%
Kainos Group (KNOS) 1,080.00p 3.45%
Breedon Group (BREE) 406.00p 2.92%
Ithaca Energy (ITH) 126.50p 2.68%
Close Brothers Group (CBG) 516.50p 2.38%
TBC Bank Group (TBCG) 2,910.00p 1.93%
Genus (GNS) 1,720.00p 1.78%

FTSE 250 - Fallers

Hochschild Mining (HOC) 169.00p -8.05%
Centamin (DI) (CEY) 119.90p -7.34%
Endeavour Mining (EDV) 1,680.00p -6.98%
Carnival (CCL) 1,247.00p -5.49%
Morgan Advanced Materials (MGAM) 317.00p -4.08%
Howden Joinery Group (HWDN) 910.00p -3.96%
ITV (ITV) 81.05p -3.91%
Hammerson (HMSO) 28.52p -3.84%
Pennon Group (PNN) 614.00p -3.61%
Watches of Switzerland Group (WOSG) 402.60p -3.45%