London midday: Stocks maintain gains but Burberry bucks trend after update

London stocks were still in the black by midday on Friday as investors shrugged off weak Chinese data.

The FTSE 100 was up 0.7% at 7,087.92.

Sentiment got a boost after two US Federal Reserve officials - Fed governor Christopher Waller and St Louis Fed President Jamie Bullard - suggested they were leaning towards a 75 basis points rate hike this month and away from a 100 basis points increase.

Investors were also digesting the latest data out of China, which showed that economic growth slowed sharply in the second quarter as the country’s zero Covid strategy took its toll.

According to the National Bureau of Statistics, real GDP grew by 0.4% year-on-year in the second quarter, hitting a two-year low and down from 4.8% in the previous quarter. Analysts had been expecting 1.2% growth.

On a quarter-on-quarter basis, GDP fell 2.6% following 1.3% growth in Q1 and versus expectations for a 2% contraction.

"Domestically, the impact of the epidemic is lingering," the NBS said, adding that the risk of stagflation in the world economy is rising.

Shanghai was locked down for two months until the end of May, while Beijing was also placed on lockdown several times.

Danni Hewson, financial analyst at AJ Bell, said: "Although European indices traded higher on Friday, China’s problems could have a ripple effect and cause more turmoil on the markets in the coming days and weeks.

"China is one of Asia’s key growth powerhouses. We already knew that growth expectations were being pared back, but the latest GDP figure is the sort of pedestrian number one might expect from a developed Western nation.

"This doesn’t bode well as recession fears grow in many parts of the world, and it could fuel speculation that China’s commodities appetite may wane if economic activity is stalling."

In equity markets, luxury car maker Aston Martin rallied as it reaffirmed its outlook and announced a £653m equity capital raise to "meaningfully" de-leverage the balance sheet, in a move that will result in Saudi Arabia’s sovereign wealth fund becoming its second-biggest shareholder.

The company will place 23.3m shares at 33p each with Saudi Public Investment Fund (PIF) to raise £78m in exchange for a 16.7% stake. This will make PIF the car maker’s second-largest shareholder after chairman Lawrence Stroll. There will also be a rights issue to raise £575m.

Luxury fashion brand Burberry was under the cosh, however, as it said first-quarter same-store sales increased just 1% year-on-year as revenues were impacted by lockdowns across mainland China.

Rio Tinto lost ground after the miner sounded a cautious note on the outlook in its second-quarter production results.

Drinks maker Britvic also suffered heavy losses after posh tonics maker Fever-Tree downgraded its full-year profit guidance amid higher costs and highlighted an "exceptionally challenging" environment.

Admiral and easyJet were both knocked lower by a downgrade to ‘underweight’ at JPMorgan, while Wizz Air was hit by a downgrade to ‘reduce’ at HSBC.

Market Movers

FTSE 100 (UKX) 7,087.92 0.68%
FTSE 250 (MCX) 18,647.87 0.90%
techMARK (TASX) 4,258.27 0.59%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 88.95p 4.25%
Airtel Africa (AAF) 154.50p 3.28%
Harbour Energy (HBR) 323.90p 2.76%
Smith (DS) (SMDS) 280.50p 2.75%
BP (BP.) 372.95p 2.47%
British American Tobacco (BATS) 3,448.00p 2.45%
Shell (SHEL) 1,979.40p 2.22%
Melrose Industries (MRO) 159.45p 2.15%
Smiths Group (SMIN) 1,442.00p 2.02%
Land Securities Group (LAND) 670.00p 1.92%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,531.00p -7.13%
Admiral Group (ADM) 1,858.50p -3.88%
United Utilities Group (UU.) 1,023.50p -2.66%
Severn Trent (SVT) 2,785.00p -2.55%
Rio Tinto (RIO) 4,450.50p -2.55%
Anglo American (AAL) 2,502.50p -1.77%
Flutter Entertainment (CDI) (FLTR) 7,536.00p -1.28%
Halma (HLMA) 2,071.00p -1.19%
London Stock Exchange Group (LSEG) 7,560.00p -0.87%
Dechra Pharmaceuticals (DPH) 3,532.00p -0.84%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 440.20p 18.56%
Ferrexpo (FXPO) 113.00p 5.61%
Darktrace (DARK) 339.40p 4.95%
Micro Focus International (MCRO) 280.30p 4.90%
Marks & Spencer Group (MKS) 133.95p 3.44%
Bellway (BWY) 2,270.00p 3.42%
NCC Group (NCC) 188.80p 3.17%
Grafton Group Ut (CDI) (GFTU) 766.70p 3.02%
Mitie Group (MTO) 63.50p 2.92%
RHI Magnesita N.V. (DI) (RHIM) 1,889.00p 2.89%

FTSE 250 - Fallers

Polymetal International (POLY) 160.00p -10.24%
Britvic (BVIC) 813.00p -4.30%
Pennon Group (PNN) 964.50p -3.02%
4Imprint Group (FOUR) 2,280.00p -2.15%
Smithson Investment Trust (SSON) 1,208.00p -1.63%
Wizz Air Holdings (WIZZ) 1,758.50p -1.32%
Edinburgh Worldwide Inv Trust (EWI) 179.00p -1.21%
Wetherspoon (J.D.) (JDW) 534.00p -1.11%
Hochschild Mining (HOC) 75.05p -0.99%
BlackRock World Mining Trust (BRWM) 528.00p -0.94%