London midday: Stocks rise as UK GDP beats forecasts

London stocks rose on Wednesday after official data showed UK economic growth accelerated more than expected in the second quarter.

Gross domestic product increased 0.6% in the three months to the end of June compared to the first quarter, according to a preliminary estimate from the Office for National Statistics, better than the forecast for a 0.4% rise.

Compared to the same period last year, GDP rose 2.2%, up from the 2% year-on-year growth in the first quarter and better than the 2.1% the market had expected as well as the best outturn for four quarters.

The increase was largely due to an exceptional April performance across the economy, with the quarterly reading driven higher by a strong performance from industrial production, which enjoyed a quarterly increase of 2.1% to counteract the rest of the economy slowing.

“The monthly figures point to a significant loss of momentum through the quarter which means that the launchpad for Q3 was already soft, even before we factor in any Brexit effects," said Martin Beck, senior economic advisor to the EY ITEM Club, though he felt the economy may avoid a technical recession.

He added: “GDP growth in Q2 looks likely to represent one last hurrah for the economy before it enters a softer and more turbulent period. The lack of momentum as the economy entered Q3 means that the chances of a negative reading for the current quarter are relatively high.”

The pound dropped 0.27% against the dollar to $1.3094.

The attention now turns to the Federal Reserve’s policy announcement at 1900 BST. While the central bank is expected to keep interest rates unchanged, the market will be searching for clues in the policy statement on the timing of the next rate hike.

The US also sees the release of durable goods orders data at 1330 BST and pending home sales at 1500 BST.

In corporate news, wealth manager St James’s Place rallied as it reported a drop in first half pre-tax profit but lifted its dividend.

ITV was another big riser after reporting an increase in pre-tax profit in the first half and hiking the interim dividend.

Outservices group Capita edged lower as it said the UK decision to leave the European Union had increased uncertainty, particularly in the financial services sector, and it was “continuing to experience some delays in decision making in the short term”.

GKN slumped as Citi downgraded the stock to ‘neutral’ from ‘buy’ and left its target price unchanged at 315p after the company reported a first half.

Rightmove jumped as it posted a rise in first half pre-tax profit and expressed confidence over the full year despite the impact of Brexit.

Market Movers

FTSE 100 (UKX) 6,750.53 0.39%
FTSE 250 (MCX) 17,238.76 0.99%
techMARK (TASX) 3,446.96 0.52%

FTSE 100 - Risers

ITV (ITV) 201.20p 8.87%
International Consolidated Airlines Group SA (CDI) (IAG) 418.90p 4.78%
St James's Place (STJ) 924.50p 4.58%
Taylor Wimpey (TW.) 151.40p 4.49%
Barratt Developments (BDEV) 423.40p 4.47%
Persimmon (PSN) 1,656.00p 4.28%
Berkeley Group Holdings (The) (BKG) 2,637.00p 3.61%
Dixons Carphone (DC.) 346.20p 3.01%
Burberry Group (BRBY) 1,355.00p 2.96%
Travis Perkins (TPK) 1,544.00p 2.86%

FTSE 100 - Fallers

Capita (CPI) 964.00p -2.53%
GKN (GKN) 295.30p -1.89%
SABMiller (SAB) 4,355.50p -1.24%
Hikma Pharmaceuticals (HIK) 2,611.00p -1.14%
Randgold Resources Ltd. (RRS) 8,595.00p -1.04%
Imperial Brands (IMB) 3,967.50p -1.01%
National Grid (NG.) 1,098.50p -0.90%
Provident Financial (PFG) 2,728.00p -0.73%
Diageo (DGE) 2,147.50p -0.58%
British American Tobacco (BATS) 4,759.50p -0.47%

FTSE 250 - Risers

Rightmove (RMV) 4,146.00p 9.39%
Brewin Dolphin Holdings (BRW) 258.90p 9.24%
Morgan Advanced Materials (MGAM) 273.60p 8.19%
Metro Bank (MTRO) 2,081.00p 7.82%
Crest Nicholson Holdings (CRST) 429.40p 6.92%
Renishaw (RSW) 2,583.00p 6.74%
Bellway (BWY) 2,044.00p 5.09%
Halfords Group (HFD) 353.10p 4.65%
Auto Trader Group (AUTO) 365.60p 4.25%
Jupiter Fund Management (JUP) 415.80p 4.16%

FTSE 250 - Fallers

Dignity (DTY) 2,587.00p -5.38%
Essentra (ESNT) 623.50p -3.26%
Jardine Lloyd Thompson Group (JLT) 950.50p -3.26%
Ibstock (IBST) 153.20p -2.54%
Centamin (DI) (CEY) 152.60p -2.49%
Drax Group (DRX) 339.60p -2.10%
Murray International Trust (MYI) 1,066.00p -1.48%
RIT Capital Partners (RCP) 1,748.00p -1.47%
Smurfit Kappa Group (SKG) 1,827.00p -1.30%
Vectura Group (VEC) 148.00p -1.20%