London midday: Stocks slide as UK economy loses momentum

London stocks were under the cosh on Wednesday as official data showed UK economic growth slowed to 0.4% in the first quarter of 2016.

The first quarter rise in UK gross domestic product was in line with expectations and compared with a 0.6% increase in the final three months of 2015, the Office for National Statistics revealed. It was its weakest pace of growth since the end of 2012.

On an annual basis, first quarter GDP climbed 2.1%, in line with the previous quarter's growth but above the 2.0% that was forecast.

The Bank of England has warned that growth could slow further in the second quarter amid uncertainty leading up to the 23 June referendum on Britain's membership in the European Union.

However, CMC Markets chief market analyst, Michael Hewson, believes the slowdown in GDP is not necessarily a result of uncertainty over the EU referendum.

He said the declines seen in construction production is "pretty much mirrored elsewhere in the global economy, so even with the June referendum and any uncertainty around that, these sectors would likely have struggled anyway".

Investors are now looking ahead to the Federal Reserve’s interest rate decision, announced after the close. The Fed is widely expected to keep interest rates unchanged amid a slowdown in global economic growth.

Many analysts are pricing in no chance of a rate hike over the next few meetings, and less than one full hike by the end of the year amid worries about the slowdown in the global economy.

The wording of the Fed’s policy statement will be closely scrutinised for clues on the timing of the next rate hike, although Chair Janet Yellen is expected to remain dovish.

Meanwhile, oil prices rallied after data showed a surprise fall in US oil inventories.

The American Petroleum Institute said US crude inventories decreased by 1.1 million barrels last week. The Energy Information Administration will release its official data at 1530 with analysts expecting crude stocks to have risen by 1.7 million barrels.

At 1156 BST, Brent crude rose 2.07% to $46.71 per barrel and West Texas Intermediate gained 1.9% to $44.90 per barrel.

On the corporate front, Worldpay’s shares jumped after UBS upgraded the stock to ‘buy’ from ‘neutral’, saying the pullback in the shares provides an opportunity.

Whitbread gained a day after reporting its full year results, revealing a 12% increase in total revenue to £2.91bn and an 11.9% gain in underlying profit before tax to £546.3m.

Weir Group slumped after Canaccord Genuity downgraded its rating on the stock to ‘sell’ from ‘hold’ and cut its price target to 880p from 940p.

Standard Chartered reversed the previous day’s rally as Deutsche Bank downgraded the bank to ‘sell’ from ‘hold’ and cut the price target to 454p from 460p following the company’s first-quarter results on Tuesday.

Fellow banks Lloyds Banking Group and HSBC were also under pressure.

Market Movers

FTSE 100 (UKX) 6,255.97 -0.45%
FTSE 250 (MCX) 17,008.85 0.37%
techMARK (TASX) 3,083.46 0.01%

FTSE 100 - Risers

easyJet (EZJ) 1,513.00p 3.56%
Worldpay Group (WI) (WPG) 264.80p 2.52%
Kingfisher (KGF) 369.20p 2.30%
ARM Holdings (ARM) 948.50p 2.26%
International Consolidated Airlines Group SA (CDI) (IAG) 547.50p 2.24%
TUI AG Reg Shs (DI) (TUI) 1,028.00p 2.19%iii
Centrica (CNA) 237.20p 2.15%
SSE (SSE) 1,516.00p 1.34%
ITV (ITV) 235.90p 1.33%
Whitbread (WTB) 4,016.00p 1.18%

FTSE 100 - Fallers

Tesco (TSCO) 175.60p -4.28%
Standard Chartered (STAN) 550.90p -3.59%
Lloyds Banking Group (LLOY) 68.56p -2.06%
HSBC Holdings (HSBA) 460.20p -1.96%
Prudential (PRU) 1,382.00p -1.95%
BHP Billiton (BLT) 909.70p -1.85%
Rio Tinto (RIO) 2,184.00p -1.64%
Legal & General Group (LGEN) 237.10p -1.50%
Imperial Brands (IMB) 3,628.50p -1.48%
Aviva (AV.) 431.50p -1.42%

FTSE 250 - Risers

Centamin (DI) (CEY) 105.80p 4.65%
Tullow Oil (TLW) 252.20p 3.87%
OneSavings Bank (OSB) 296.80p 3.70%
Aldermore Group (ALD) 191.00p 3.24%
Paysafe Group (PAYS) 381.50p 3.11%
Balfour Beatty (BBY) 243.70p 3.09%
Just Eat (JE.) 384.80p 3.03%
Telecom Plus (TEP) 959.50p 3.01%
Amec Foster Wheeler (AMFW) 499.80p 2.95%
Drax Group (DRX) 332.00p 2.91%

FTSE 250 - Fallers

McCarthy & Stone (MCS) 238.50p -4.79%
Stagecoach Group (SGC) 256.10p -4.44%
Weir Group (WEIR) 1,114.00p -3.72%
Polar Capital Technology Trust (PCT) 570.50p -2.81%
Jimmy Choo (CHOO) 124.50p -2.35%
Essentra (ESNT) 820.00p -2.09%
Elementis (ELM) 226.10p -1.91%
DFS Furniture (DFS) 292.40p -1.88%
Galliford Try (GFRD) 1,297.00p -1.74%
Kaz Minerals (KAZ) 179.10p -1.59%