London midday: Stocks extend gains after GDP; Pearson surges

London stocks had extended gains by midday on Friday as investors mulled better-than-expected UK GDP data, with deal news also lending a hand as Pearson shot higher.

The FTSE 100 was up 1.6% at 7,210.68, while sterling was 0.2% firmer against the dollar at 1.3105 as figures from the Office for National Statistics showed the economy bounced back strongly in January after taking a hit from the Omicron variant and Plan B restrictions.

GDP grew 0.8% after contracting by 0.2% in December, coming in comfortably ahead of expectations of 0.1% growth. This leave GDP 0.8% above pre-pandemic February 2020 levels.

Darren Morgan, ONS director of economic statistics, said: 2All sectors grew in January with some industries that were hit particularly hard in December now performing well, including wholesaling, retailing, restaurants and takeaways. Computer programming and film and television production also had a good start to the year.

"While supply chain issues persisted in certain sectors, output in both construction and manufacturing grew for the third month running."

Paul Dales, chief UK economist at Capital Economics, said the rebound from Omicron may be as good as it gets this year, however.

"GDP in February will probably be fairly good too. But the cost of living crisis and the influence of the war in Ukraine probably means this is as good as it gets for the year," he said.

"Given that Omicron cases were still very high in the first half of January, some of the rebound in activity may have flowed into February too (although storm Eunice may have been a drag). But the hit to households’ real disposable incomes due to surging energy prices, partly due to the war in Ukraine, and higher taxes will start to be felt from March and April.

"As such, GDP growth will probably slow throughout the year. With high inflation filtering into higher price/wage expectations, this won’t stop the Bank of England from raising interest rates further, with the next hike on Thursday (probably by 25bps from 0.50% to 0.75%)."

Also helping to lift sentiment was news that Russian President Vladimir Putin said there had been "certain positive shifts" in talks with Ukraine on Friday, although he provided no details.

In a meeting with Belarusian counterpart Alexander Lukashenko, Putin said: "There are certain positive shifts, negotiators on our side tell me."

In equity markets, Pearson shares surged to the top of the FTSE 100 after US asset manager Apollo Global Management confirmed it is in the preliminary stages of evaluating a possible cash offer for the educational publisher.

Online supermarket Ocado also rose after the International Trade Commission rejected patent infringement claims made against the UK company by Norwegian warehouse robot maker AutoStore.

Russian steelmaker Evraz was in the spotlight again as it said 10 members of its board had quit following the UK sanction of its largest shareholder Roman Abramovich and the suspension of its shares.

Berkeley Group gained after the housebuilder said it was on track to meet full-year earnings guidance as it continued to trade "robustly" since 1 November.

Elsewhere, Cineworld powered higher ahead of its full-year results next week. Russ Mould, investment director at AJ Bell, said: "While revenue is forecast to have more than doubled in the year, it won’t have been enough to stop the business from making a loss. In fact, Cineworld isn’t forecast to return to profit until 2023.

"2021 was another year disrupted by Covid restrictions, but the latest Spiderman film proved to be a big hit at the box office and should have given cinema operators a boost both in terms of earnings and public sentiment towards going to the big screen.

"The market will be very interested to know how Cineworld’s trading has been so far in 2022. We’ve had two years of getting used to watching films on streaming platforms – it could be hard to wean people off this habit.

"This year hasn’t seen any big blockbuster films released apart from The Batman, so one can only assume that Cineworld will provide optimistic comment mainly based on hope for titles released later this year, such as the latest in the Jurassic Park, Doctor Strange and Minions franchises, rather than celebrate ticket and popcorn sales year to date."

Market Movers

FTSE 100 (UKX) 7,210.68 1.57%
FTSE 250 (MCX) 20,338.07 1.92%
techMARK (TASX) 4,217.45 1.58%

FTSE 100 - Risers

Pearson (PSON) 801.60p 23.40%
Flutter Entertainment (CDI) (FLTR) 9,156.00p 7.19%
Melrose Industries (MRO) 121.75p 7.08%
CRH (CDI) (CRH) 3,175.00p 5.03%
Entain (ENT) 1,531.50p 4.54%
Informa (INF) 559.60p 4.40%
International Consolidated Airlines Group SA (CDI) (IAG) 137.04p 4.15%
Polymetal International (POLY) 157.20p 3.93%
InterContinental Hotels Group (IHG) 4,989.00p 3.89%
Barclays (BARC) 163.78p 3.80%

FTSE 100 - Fallers

Fresnillo (FRES) 737.00p -3.81%
United Utilities Group (UU.) 1,060.50p -1.16%
Severn Trent (SVT) 2,851.00p -1.01%
National Grid (NG.) 1,125.60p -0.69%
Dechra Pharmaceuticals (DPH) 4,020.00p -0.64%
Associated British Foods (ABF) 1,709.50p -0.35%
Croda International (CRDA) 6,832.00p -0.32%
BAE Systems (BA.) 732.60p -0.22%
SSE (SSE) 1,668.50p -0.21%
Reckitt Benckiser Group (RKT) 5,733.00p -0.05%

FTSE 250 - Risers

PureTech Health (PRTC) 204.00p 8.51%
Trustpilot Group (TRST) 161.80p 8.37%
Cineworld Group (CINE) 35.17p 7.78%
National Express Group (NEX) 256.80p 7.54%
Aston Martin Lagonda Global Holdings (AML) 873.00p 7.12%
Wizz Air Holdings (WIZZ) 2,898.00p 6.82%
Carnival (CCL) 1,290.80p 6.19%
888 Holdings (888) 197.80p 5.66%
Edinburgh Worldwide Inv Trust (EWI) 212.50p 5.46%
Greggs (GRG) 2,353.00p 5.42%

FTSE 250 - Fallers

Baltic Classifieds Group (BCG) 120.50p -3.60%
Hill & Smith Holdings (HILS) 1,370.00p -2.97%
Hochschild Mining (HOC) 134.70p -2.95%
Energean (ENOG) 1,008.00p -2.14%
Centamin (DI) (CEY) 103.25p -2.09%
Capricorn Energy (CNE) 192.60p -1.58%
Ferrexpo (FXPO) 145.10p -1.49%
Network International Holdings (NETW) 196.05p -1.18%
Convatec Group (CTEC) 178.95p -1.05%
Drax Group (DRX) 713.00p -1.04%