London close: Stocks tumble as recession fears rock markets

London stocks ended Thursday’s session firmly in the red amid ongoing concerns about a global downturn, as investors mulled the latest reading on UK economic growth and household incomes.

The FTSE 100 closed down 2% at 7,169.28.

Oanda market analyst Craig Erlam said: "Stock markets have fallen heavily in June so it seems only fitting that they're ending the month with big losses as reality continues to bite.

"There's no getting away from recession chat and while the heads of the Fed, ECB and BoE didn't exactly fuel that during their panel discussion on Wednesday, they didn't do anything to dispel it either. They all know that there's a strong likelihood of recession this year or next and investors are increasingly accepting that fate as well."

On home shores, figures released by the Office for National Statistics showed the economy grew 0.8% in the first quarter, in line with the initial estimate, and down from 1.3% growth in the fourth quarter of 2021.

On an annual basis, GDP growth for the first quarter was confirmed at 8.7%, up from 6.6% in the final quarter of last year.

ONS director of Economic Statistics, Darren Morgan, said: "Our latest estimate for economic growth in the first quarter is unrevised as a whole, showing the UK economy continued to recover from the pandemic."

ONS data also showed that household incomes fell for the fourth quarter in a row in the first quarter of the year - the longest run of declines since 1955. Adjusted for inflation, disposable incomes fell 0.2%, leaving incomes down 1.3% on the year even before the increase in energy bills and National Insurance in April.

Capital Economics said: "The final Q1 GDP data leave households looking a bit more vulnerable to the big fall in real incomes that’s going to hit in Q2 and Q3.

"Although GDP and consumer spending won’t fall as far as real incomes, it’s pretty clear that the economy is going to be very weak for a while. A recession is a real risk."

The latest survey from Nationwide was also in focus. It showed the pace of growth in house prices slowed in June from the previous month, with "tentative" signs of a slowdown in the market.

House prices in June were 0.3% higher than in May, when they rose 0.9%, and were up 10.7% year-on-year, a slowdown from May’s annual growth of 11.2%. Economists had forecast monthly and annual price rises of 0.5% and 10.8% respectively.

In equity markets, miner Anglo American was the biggest loser on the FTSE 100.

Aston Martin tanked following an Autocar report it’s seeking to raise funds to safeguard its future, wanting to significantly strengthen its financial position as it ramps up investment for its next-generation platforms and future electrification strategy.

B&M European Value Retail, Burberry and Liontrust were all weaker as they traded without entitlement to the dividend.

On the upside, distribution and services group Bunzl rallied after it said first-half operating margin was expected to be slightly higher than historic levels as inflation and acquisitions drove underlying growth.

Virgin Money gained as it launched a £75m share buyback programme. It was also boosted by an upgrade to ‘overweight’ at Barclays.

Market Movers

FTSE 100 (UKX) 7,169.28 -1.96%
FTSE 250 (MCX) 18,666.78 -1.95%
techMARK (TASX) 4,275.79 -0.99%

FTSE 100 - Risers

Croda International (CRDA) 6,472.00p 1.92%
Bunzl (BNZL) 2,719.00p 1.80%
Spirax-Sarco Engineering (SPX) 9,878.00p 1.65%
Auto Trader Group (AUTO) 555.00p 0.73%
WPP (WPP) 824.60p 0.56%
Pearson (PSON) 749.80p 0.54%
BAE Systems (BA.) 830.20p 0.39%
Coca-Cola HBC AG (CDI) (CCH) 1,822.00p 0.28%
Vodafone Group (VOD) 126.66p 0.13%
CRH (CDI) (CRH) 2,824.00p 0.00%

FTSE 100 - Fallers

Anglo American (AAL) 2,937.00p -5.32%
Smith (DS) (SMDS) 277.30p -5.16%
B&M European Value Retail S.A. (DI) (BME) 366.70p -5.10%
Scottish Mortgage Inv Trust (SMT) 715.40p -4.69%
Pershing Square Holdings Ltd NPV (PSH) 2,450.00p -4.11%
Unite Group (UTG) 1,064.00p -4.06%
Barratt Developments (BDEV) 457.40p -3.91%
SEGRO (SGRO) 976.80p -3.91%
Mondi (MNDI) 1,455.00p -3.83%
Associated British Foods (ABF) 1,578.00p -3.72%

FTSE 250 - Risers

Victrex plc (VCT) 1,779.00p 2.83%
Genus (GNS) 2,508.00p 2.79%
Lancashire Holdings Limited (LRE) 403.20p 2.28%
Jlen Environmental Assets Group Limited NPV (JLEN) 122.20p 2.17%
Virgin Money UK (VMUK) 130.50p 1.95%
Syncona Limited NPV (SYNC) 204.00p 1.24%
Beazley (BEZ) 500.00p 1.09%
Future (FUTR) 1,723.00p 0.82%
QinetiQ Group (QQ.) 367.60p 0.77%
Spirent Communications (SPT) 248.60p 0.65%

FTSE 250 - Fallers

Workspace Group (WKP) 556.00p -8.85%
Liontrust Asset Management (LIO) 913.00p -8.52%
Savills (SVS) 1,018.00p -8.21%
Aston Martin Lagonda Global Holdings (AML) 442.00p -7.96%
Caledonia Investments (CLDN) 3,490.00p -7.67%
Hammerson (HMSO) 18.97p -7.60%
Chrysalis Investments Limited NPV (CHRY) 104.20p -7.46%
Supermarket Income Reit (SUPR) 120.00p -7.34%
Bank of Georgia Group (BGEO) 1,306.00p -6.98%
Darktrace (DARK) 294.60p -6.18%