London midday: Stocks higher after GDP data; US earnings eyed

London stocks were still firmer by midday on Friday after a better-than-expected UK GDP reading, as investors eyed the release of key US bank earnings.

The FTSE 100 was up 0.4% at 7,828.15, trading at its best level in more than four years.

Data out earlier from the Office for National Statistics showed that the economy unexpectedly grew in November.

Monthly gross domestic product nudged 0.1% higher in November, following growth of 0.5% in October. Analysts had been expecting a 0.2% decline. In the three months to November, however, GDP fell 0.3%, primarily due to the extra bank holiday in September for the late Queen’s state funeral.

The main driver of November’s growth was the services sector, which grew 0.2% following an increase of 0.7% in October, which the ONS revised upwards from its earlier estimate for 0.6%. The largest contributions came from administrative and support services activities as well as information and communication.

The FIFA football World Cup, which kicked off on 20 November, also helped, the ONS noted. Output in consumer-facing services growing by 0.4%, with the largest contribution coming from food and beverage services activities.

Production output decreased by 0.2%, following a fall of 0.1% in October, which was revised down from no change, dragged lower by manufacturing, which slid 0.5%. The construction sector was flat following growth of 0.4% a month previously.

Despite the upbeat mood, Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, struck a note of caution: "The idea that the UK will formally enter a recession soon is still very much a likelihood. The boost in November could stem from extra spending in the economy in the run up to Christmas, and there’s real risk now that consumers are going to tighten their belts.

"As people’s incomes come under such pressure because of inflation, and businesses grapple with the January slump, the amount of economic activity taking place is likely to reduce from here. Policymakers are keen to see heat taken out the economy because this will help to bring inflation down, which will eventually end the continuous rise in interest rates. Ultimately, it’s nice to see the UK squeeze out half an ounce of economic growth, but very real challenges persist."

Investors were also keeping an eye out for corporate news across the pond, with earnings due from banking giants Citigroup, Bank of America and JPMorgan, as they kick off the earnings season on Wall Street.

In UK equity markets, banks NatWest and Lloyds were among the top performers on the FTSE 100, while British Gas owner Centrica rose for the second day in a row after it upgraded earnings guidance on Thursday.

Gambling firm 888 Holdings was weaker as it announced the departure of its chief financial officer and reported a 3% fall in group revenues for 2022.

Taylor Wimpey was little changed after the housebuilder said full-year operating profit was set to be in line with market views, but cautioned that sales remain "significantly" below the third quarter of last year amid rising mortgage rates and ongoing market uncertainty.

Bulmers and Magners owner C&C Group tumbled as it downgraded its full-year profit expectations, citing cost-of-living pressures on consumers.

Market Movers

FTSE 100 (UKX) 7,828.15 0.44%
FTSE 250 (MCX) 19,909.80 0.35%
techMARK (TASX) 4,523.15 0.26%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 107.90p 3.75%
Centrica (CNA) 98.06p 2.92%
NATWEST GROUP (NWG) 293.90p 2.23%
Lloyds Banking Group (LLOY) 49.75p 2.05%
Glencore (GLEN) 554.00p 1.89%
International Consolidated Airlines Group SA (CDI) (IAG) 155.48p 1.71%
Hargreaves Lansdown (HL.) 925.40p 1.69%
Airtel Africa (AAF) 116.00p 1.58%
AstraZeneca (AZN) 11,604.00p 1.36%
RS Group (RS1) 926.50p 1.31%

FTSE 100 - Fallers

Fresnillo (FRES) 943.60p -2.52%
British American Tobacco (BATS) 3,119.50p -1.67%
Mondi (MNDI) 1,484.50p -1.49%
Sainsbury (J) (SBRY) 240.90p -1.47%
Pearson (PSON) 923.80p -1.47%
Flutter Entertainment (CDI) (FLTR) 12,370.00p -1.20%
Ashtead Group (AHT) 5,014.00p -1.10%
Imperial Brands (IMB) 2,035.00p -1.02%
Ocado Group (OCDO) 750.20p -1.00%
Entain (ENT) 1,450.50p -0.99%

FTSE 250 - Risers

ASOS (ASC) 741.50p 4.66%
Dechra Pharmaceuticals (DPH) 2,944.00p 4.18%
Wood Group (John) (WG.) 155.40p 3.02%
Tullow Oil (TLW) 37.80p 3.00%
Inchcape (INCH) 922.50p 2.96%
Carnival (CCL) 748.00p 2.89%
ITV (ITV) 79.74p 2.76%
easyJet (EZJ) 428.80p 2.53%
Network International Holdings (NETW) 308.60p 2.52%
Bridgepoint Group (Reg S) (BPT) 226.00p 2.45%

FTSE 250 - Fallers

C&C Group (CDI) (CCR) 167.60p -8.81%
888 Holdings (DI) (888) 88.90p -4.92%
Pennon Group (PNN) 935.50p -3.66%
Paragon Banking Group (PAG) 561.00p -3.61%
Direct Line Insurance Group (DLG) 177.20p -3.06%
Hilton Food Group (HFG) 604.00p -2.27%
Shaftesbury (SHB) 379.20p -2.17%
Volution Group (FAN) 404.00p -2.06%
Wetherspoon (J.D.) (JDW) 488.60p -1.65%
Travis Perkins (TPK) 1,017.50p -1.50%