London midday: Stocks maintain gains amid easing trade tensions; Ocado rallies
London stocks were still in the green by midday on Monday amid easing trade tensions, while the pound was under pressure after disappointing UK growth figures.
The FTSE 100 was up 0.5% at 7,366.89, while the pound was down 0.5% against the dollar at 1.2677 and 0.3% lower versus the euro at 1.1204 as the latest data from the Office for National Statistics showed the UK economy shrank more than expected in April as car production tumbled.
Gross domestic product fell by 0.4% on the month in April, coming in much weaker than consensus expectations of a 0.1% contraction.
For the three months to April, growth slowed to 0.3% from 0.5% in March, falling short of expectations for 0.4% growth.
Head of GDP Rob Kent-Smith said: "GDP growth showed some weakening across the latest three months, with the economy shrinking in the month of April mainly due to a dramatic fall in car production, with uncertainty ahead of the UK’s original EU departure date leading to planned shutdowns.
"There was also widespread weakness across manufacturing in April, as the boost from the early completion of orders ahead of the UK’s original EU departure date has faded."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said April’s drop in GDP almost entirely reflects the unwinding of the boost to activity in the first quarter from precautionary pre-Brexit stockpiling.
"The drop was driven by a huge 2.7% month-to-month decline in industrial production, primarily reflecting a 3.9% drop in manufacturing output, the biggest since June 2002. Output fell in most manufacturing sub-sectors, amid a pullback in demand from artificially high levels in Q1.
"Note too that motor vehicle production slumped by 24%, as car plants brought forward their annual maintenance shutdowns from the summer, to minimise the losses they would have experienced if a no-deal Brexit had occurred in April. Output in this sector should fully rebound in May, boosting GDP growth by 0.17pp."
More broadly, sentiment was underpinned by US President Donald Trump's decision not to levy tariffs on Mexico over immigration.
Neil Wilson, chief market analyst at CMC Markets, said: "Whilst this is positive for risk assets, one should be cautious that this may only embolden Mr Trump to use tariffs as policy tool for the pursuit of non-economic interests. As previously suggested, the EU could be next - maybe to get the 2% defence spending target."
In equity markets, Ocado was the standout gainer after the online grocer said it was making a £17m investment in the vertical farming industry.
Outside the FTSE 350, Thomas Cook shares surged as the company confirmed that Hong Kong's Fosun Tourism was in talks to buy its tour operating business as the British group faces breakup after issuing three profit warnings in the past year.
On the downside, shares in plumbing products distributor Ferguson led the FTSE 100 fallers as third-quarter revenue fell short of estimates due to slower growth in the US, which is its largest market.
Woodford Patient Capital Trust, the listed fund run by Neil Woodford, also fell heavily, despite reassuring investors that the suspension of his flagship equity fund had not affected its "operational performance".
Market Movers
FTSE 100 (UKX) 7,366.89 0.48%
FTSE 250 (MCX) 19,284.30 0.27%
techMARK (TASX) 3,582.94 0.28%
FTSE 100 - Risers
Ocado Group (OCDO) 1,148.50p 3.19%
Evraz (EVR) 649.20p 2.56%
NMC Health (NMC) 2,256.00p 2.55%
Antofagasta (ANTO) 823.60p 2.31%
Standard Chartered (STAN) 707.10p 2.18%
Just Eat (JE.) 601.60p 2.04%
Kingfisher (KGF) 213.40p 1.91%
TUI AG Reg Shs (DI) (TUI) 756.60p 1.80%
Spirax-Sarco Engineering (SPX) 8,695.00p 1.58%
Pearson (PSON) 812.20p 1.58%
FTSE 100 - Fallers
Ferguson (FERG) 5,024.00p -6.06%
Hargreaves Lansdown (HL.) 1,850.50p -4.59%
Fresnillo (FRES) 797.20p -1.82%
Ashtead Group (AHT) 1,919.50p -1.77%
Next (NXT) 5,648.00p -1.19%
Rolls-Royce Holdings (RR.) 900.40p -0.99%
Severn Trent (SVT) 2,058.00p -0.96%
United Utilities Group (UU.) 827.60p -0.86%
National Grid (NG.) 816.10p -0.83%
Direct Line Insurance Group (DLG) 325.90p -0.64%
FTSE 250 - Risers
Babcock International Group (BAB) 495.30p 3.19%
Contour Global (GLO) 207.76p 2.85%
Kier Group (KIE) 160.10p 2.76%
Playtech (PTEC) 431.30p 2.69%
TBC Bank Group (TBCG) 1,622.00p 2.53%
Royal Mail (RMG) 200.40p 2.30%
Capita (CPI) 108.95p 2.25%
Tullow Oil (TLW) 205.90p 2.13%
BCA Marketplace (BCA) 194.30p 1.94%
RHI Magnesita N.V. (DI) (RHIM) 4,668.00p 1.92%
FTSE 250 - Fallers
Woodford Patient Capital Trust (WPCT) 59.33p -5.52%
Card Factory (CARD) 186.00p -3.93%
AJ Bell (AJB) 400.18p -2.39%
Galliford Try (GFRD) 661.00p -2.36%
TI Fluid Systems (TIFS) 177.40p -1.99%
Hastings Group Holdings (HSTG) 178.30p -1.98%
IP Group (IPO) 72.80p -1.62%
Saga (SAGA) 40.42p -1.51%
Drax Group (DRX) 298.20p -1.39%
Sophos Group (SOPH) 395.80p -1.25%