London midday: Stocks in the red amid global downturn worries
London stocks were still firmly in the red by midday on Thursday amid ongoing concerns about a global downturn, as investors mulled the latest reading on UK GDP and household incomes.
The FTSE 100 was down 1.7% at 7,189.31 .
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "A sense of foreboding is again gripping financial markets, with anxiety rising that by attacking inflation, central banks risk severely weakening economies."
Figures released earlier 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.
Investors were also digesting data out of China, which showed that activity in the manufacturing and services sectors rebounded in June as Covid restrictions were eased in Shanghai.
The official manufacturing purchasing managers’ index rose to 50.2 in June from 49.6 in May, coming in just below consensus expectations for a reading of 50.5 and marking its strongest level since February. The non-manufacturing PMI ticked up to 54.7 in June from 47.8 the month before, versus consensus expectations of 50.5.
In equity markets, housebuilders were under the cosh after the release of the Nationwide survey, with Persimmon and Barratt both lower.
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.
It was understood that the fundraising could include bringing in a significant new investor, potentially offering a position on the company’s board as an inducement for a holding that could be valued at more than £200m.
Elsewhere, B&M European Value Retail, Burberry, Tate & Lyle and Liontrust were all weaker as they traded without entitlement to the dividend.
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 advanced as it launched a £75m share buyback programme. It was also boosted by an upgrade to ‘overweight’ at Barclays.
Market Movers
FTSE 100 (UKX) 7,189.31 -1.68%
FTSE 250 (MCX) 18,617.64 -2.21%
techMARK (TASX) 4,254.66 -1.48%
FTSE 100 - Risers
Bunzl (BNZL) 2,680.00p 0.34%
BAE Systems (BA.) 828.80p 0.22%
BP (BP.) 397.80p 0.03%
Meggitt (MGGT) 789.60p -0.05%
Vodafone Group (VOD) 126.38p -0.09%
Harbour Energy (HBR) 367.40p -0.16%
Endeavour Mining (EDV) 1,715.00p -0.35%
Airtel Africa (AAF) 137.40p -0.36%
Antofagasta (ANTO) 1,168.00p -0.43%
WPP (WPP) 815.60p -0.54%
FTSE 100 - Fallers
B&M European Value Retail S.A. (DI) (BME) 362.60p -6.16%
Aveva Group (AVV) 2,191.00p -4.95%
Burberry Group (BRBY) 1,618.00p -4.54%
Intermediate Capital Group (ICP) 1,285.00p -4.50%
Barratt Developments (BDEV) 455.50p -4.31%
Intertek Group (ITRK) 4,163.00p -4.30%
Smith (DS) (SMDS) 280.10p -4.21%
Next (NXT) 5,738.00p -3.92%
Kingfisher (KGF) 236.20p -3.87%
Melrose Industries (MRO) 147.60p -3.84%
FTSE 250 - Risers
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,175.00p 2.35%
Jlen Environmental Assets Group Limited NPV (JLEN) 122.40p 2.34%
Virgin Money UK (VMUK) 131.25p 2.34%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 639.50p 1.30%
Polymetal International (POLY) 191.95p 1.03%
Drax Group (DRX) 652.00p 1.01%
BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 162.60p 0.74%
Greencoat UK Wind (UKW) 153.80p 0.20%
Capricorn Energy (CNE) 218.40p 0.09%
The Renewables Infrastructure Group Limited (TRIG) 134.60p 0.00%
FTSE 250 - Fallers
Aston Martin Lagonda Global Holdings (AML) 413.20p -13.95%
Chrysalis Investments Limited NPV (CHRY) 105.00p -6.75%
Liontrust Asset Management (LIO) 932.00p -6.61%
Ferrexpo (FXPO) 129.90p -6.21%
Currys (CURY) 65.90p -6.19%
Supermarket Income Reit (SUPR) 121.50p -6.18%
Hammerson (HMSO) 19.28p -6.11%
Bank of Georgia Group (BGEO) 1,320.00p -5.98%
Caledonia Investments (CLDN) 3,555.00p -5.95%
TI Fluid Systems (TIFS) 150.20p -5.77%