London close: Stocks sink on surprise rise in UK GDP

London stocks remained in the red at the close of trading on Friday, as market participants reacted to a mixture of stronger-than-anticipated UK GDP numbers and fresh US producer inflation data.

The FTSE 100 declined 1.24%, ending the trading session at 7,524.16 points, while its FTSE 250 mid-cap counterpart wasn't far behind, shedding 1.02% to settle at 18,799.70 points.

On the currency front, sterling exhibited strength against both the dollar and the euro, rising 0.08%, on the former to trade at $1.2686, and advancing 0.36% on the latter, changing hands at €1.1584.

“After its attempt to make headway yesterday, the FTSE 100 is on the back foot again, and looks set to end the week on a downbeat note. It is in good company, with markets across Europe lower following signs that price pressures in the US are beginning to revive,” said IG chief market analyst Chris Beauchamp.

“Stocks have been highly sensitive to bad news throughout August, and a combination of rising US inflation and weak Chinese data in recent sessions has been enough to tip the FTSE 100 to the downside once again.”

UK experiences unexpected economic boost; US producer inflation surges

In economic news, the UK economy put in a stronger-than-anticipated performance for the second quarter of 2023.

The Office for National Statistics (ONS) earlier unveiled that the UK's gross domestic product (GDP) rose 0.2% between April and June.

That uptick, making for the most robust growth rate in over 12 months, surpassed the 0.1% increment seen in the first quarter, and confounded widespread predictions for a stagnant print.

ONS analysts speculated that the absence of a bank holiday in June, contrasted with May's three holidays due to the King's coronation, could have played a role.

Year-on-year, GDP growth accelerated to 0.4% from the previous 0.2%.

“Contrary to a lot of expectations, economic activity has managed to hold up reasonably well, despite soaring inflation which has weighed on demand, and especially on the more discretionary areas of the UK economy," said CMC Markets chief market analyst Michael Hewson.

However, he pointed out that the outlook for consumer spending and economic activity in the third quarter was more uncertain, despite petrol prices having come off their highs, as the impact of elevated interest rates started to bite.

Interest rates in the UK are currently at their highest level in over 15 years.

“With more and more fixed rate mortgages set to get refinanced in the coming months the second half of the year for the UK economy could well be a lot more challenging than the first half.”

Across the pond, the US Bureau of Labor Statistics reported a hike in producer price inflation for July.

Seasonal adjustments resulted in a 0.3% surge in the producer price index (PPI), outpacing the anticipated 0.2% rise and a revised stagnant rate in June.

The momentum was put down to 0.5% growth in services, moderated by a marginal 0.1% upswing in goods.

Excluding volatile sectors such as food, energy, and trade services, July's PPI ascended by 0.2%, marking the steepest rise since February.

Annually, US PPI inflation hastened to 0.8%, from June's 0.2%.

Meanwhile, American consumer confidence remained relatively stable at the start of August, as the University of Michigan's consumer confidence index recorded a marginal drop, sliding from 71.6 in July to 71.2 in early August.

The figure was almost in line with economists' expectations for 71.0.

Mixed day for major stocks, Capita shines through

On London’s equity markets, Abrdn's share price plummeted 3.38% to reach its lowest levels since January.

The continued decline was spurred by the firm's underwhelming first-half results on Tuesday, in which the asset manager cited challenging market conditions and a “risk-off” environment as the catalyst for net outflows amounting to £4.4bn in the initial half of 2023.

Elsewhere, after encouraging first-half results on Thursday, Antofagasta shares dipped 4.2%.

Rio Tinto's announcement of gaining approval to develop essential infrastructure for its Simandou iron ore project in Guinea didn't prevent the decline either.

The downward trend was echoed by sector peers Anglo American and Glencore, with both stocks closing in the red, by 1.94% and 2.23%, respectively.

Spirax-Sarco extended its downturn from Thursday after unsatisfactory first-half results, falling 1.04%.

The engineering group, a specialist in thermal energy management and niche pumping equipment, reported that its adjusted operating profits fell organically by 13% to £171.7m.

That trailed the company's own consensus estimate, which was projected at £176m.

On the upside, Capita jumped 2.96% after receiving an upgrade from Shore Capital.

Changing its rating from 'hold' to 'buy' lifted the outsourcing giant’s stock, which had seen a more-than-25% depreciation in its value over the last month.

In small-cap news, EMIS Group rocketed 25.03% after the healthcare tech firm's plans to go private received preliminary approval from the Competition and Markets Authority.

The nod gave a green signal for its impending acquisition by UnitedHealth, with only a public consultation period left to complete.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,524.16 -1.24%
FTSE 250 (MCX) 18,799.70 -1.02%
techMARK (TASX) 4,347.53 -0.67%

FTSE 100 - Risers

Beazley (BEZ) 537.50p 1.13%
Haleon (HLN) 337.40p 0.37%
Coca-Cola HBC AG (CDI) (CCH) 2,287.00p 0.31%
Bunzl (BNZL) 2,808.00p 0.21%
NATWEST GROUP (NWG) 236.00p 0.21%
Fresnillo (FRES) 540.60p 0.19%
Weir Group (WEIR) 1,847.50p 0.14%
Airtel Africa (AAF) 115.60p 0.09%
Centrica (CNA) 141.35p -0.04%
Rolls-Royce Holdings (RR.) 207.70p -0.05%

FTSE 100 - Fallers

Entain (ENT) 1,312.50p -4.89%
Antofagasta (ANTO) 1,516.00p -4.20%
Abrdn (ABDN) 187.00p -3.38%
Scottish Mortgage Inv Trust (SMT) 666.00p -3.25%
Prudential (PRU) 1,008.50p -2.89%
Flutter Entertainment (CDI) (FLTR) 14,335.00p -2.81%
Land Securities Group (LAND) 625.40p -2.43%
Ocado Group (OCDO) 832.20p -2.32%
Relx plc (REL) 2,568.00p -2.25%
Glencore (GLEN) 444.70p -2.23%

FTSE 250 - Risers

FDM Group (Holdings) (FDM) 582.00p 12.36%
TBC Bank Group (TBCG) 2,715.00p 5.44%
Spire Healthcare Group (SPI) 222.50p 3.25%
Me Group International (MEGP) 164.00p 3.14%
Capita (CPI) 20.90p 2.96%
Ferrexpo (FXPO) 85.00p 2.91%
Savills (SVS) 907.00p 2.49%
4Imprint Group (FOUR) 5,040.00p 2.34%
Helios Towers (HTWS) 83.65p 1.40%
PZ Cussons (PZC) 167.60p 0.96%

FTSE 250 - Fallers

British Land Company (BLND) 316.70p -5.32%
Just Group (JUST) 82.70p -4.17%
Warehouse Reit (WHR) 84.80p -3.53%
TI Fluid Systems (TIFS) 142.40p -3.52%
Derwent London (DLN) 2,038.00p -3.50%
Carnival (CCL) 1,200.50p -3.34%
Aston Martin Lagonda Global Holdings (AML) 335.80p -3.06%
Great Portland Estates (GPE) 415.40p -3.03%
Close Brothers Group (CBG) 825.00p -3.00%
IWG (IWG) 165.00p -2.88%