London midday: Stocks slip as pound gains after GDP data

London stocks had slipped into the red by midday, led lower by a stronger pound and uninspiring UK growth figures.

The FTSE 100 was down 0.2% to 7,219.80, while the pound was up 0.3% versus the dollar to 1.2949.

Preliminary figures from the Office for National Statistics showed the UK economy slowed significantly in the first quarter of 2017 as consumers tightened their belts amid rising inflation.

Gross domestic product expanded by 0.3% in the first three months of the year, missing expectations for 0.4% growth and slower than the 0.7% growth seen in the final quarter of last year. It was also the slowest rate of expansion since the first quarter of 2016.

The ONS attributed the slower growth rate mainly to the services sector, which grew by 0.3% compared with 0.8% growth in the final quarter of last year. Services account for around 78% of the UK economy.

On the year, GDP expanded by 2.1%, up from 1.9% in the fourth quarter of 2016, but below estimates of 2.2%.

IG analyst Joshua Mahony said: “The FTSE is suffering amid a widespread dampening of the optimism seen in the first half of the week. This morning’s surge in the pound has hurt exporters in the FTSE, with a stronger pound typically associated with a loss of competitiveness in the global marketplace for UK exporters.

“This morning’s UK Q1 GDP figure confirmed what many expected, with the rate of growth slowing to the lowest rate in a year. The deterioration across exports, PMI surveys, industrial production and consumer confidence all pointed towards a weakening pace of growth, which has proven to be the case."

"As we enter a post article-50 world, it is likely that we are going to see a more hesitant and restrained UK economy than before, with firms holding off on investment decision-making until they get greater clarity.”

First-quarter GDP figures for the US are scheduled for release at 1330 BST.

Investors were also digesting data showing UK house prices fell in April for the second month in a row, with annual growth slowing to a near four-year low and a downbeat reading on consumer confidence. GfK’s Consumer Confidence Index fell further into negative territory in April, dropping one point to -7 in April amid worries about rising inflation and flat wages.

In corporate news, Barclays fell despite saying profits more than doubled in the first three months of the year, as the bank also announced it was booking a one-off £884m charge on its Africa business.

It was a brighter picture for RBS, however, which rallied as it said it broke into the black in the first quarter of 2017, the first quarterly profit since 2015 as total income and margins both improved. The taxpayer-owned bank swung to a net profit of £259m in the first three months of 2017, up from a £968m loss a year ago and the £4.4bn loss in the fourth quarter of last year.

Old Mutual nudged higher as it said its wealth management saw 6% growth in first quarter funds under management and it announced the appointment of Tim Tookey as its chief financial officer.

Insurer Hastings was on the front foot after saying that growth in live customer policies helped drive a 26% rise in first quarter gross written premiums to £214m.

Ultra Electronics gained after saying it remains confident despite US funding delay.

Actuator manufacturer and flow control company Rotork retreated after it reported a rise in order intake and revenue for the first quarter and reiterated its expectations for the full year, while Just Eat slipped as it said its executive chairman has taken time off for medical reasons.

Drax surged after Barclays upgraded the stock to ‘overweight’ from ‘equalweight’, while Micro Focus was boosted by an initiation at ‘buy’ by Deutsche Bank, but Berendsen fell after a downgrade at Morgan Stanley.

Market Movers

FTSE 100 (UKX) 7,219.80 -0.24%
FTSE 250 (MCX) 19,664.25 0.14%
techMARK (TASX) 3,477.74 -0.09%

FTSE 100 - Risers

BHP Billiton (BLT) 1,180.00p 2.30%
Antofagasta (ANTO) 836.50p 2.20%
Morrison (Wm) Supermarkets (MRW) 239.40p 2.13%
Glencore (GLEN) 305.70p 2.02%
Rio Tinto (RIO) 3,089.50p 1.96%
Anglo American (AAL) 1,108.00p 1.84%
Fresnillo (FRES) 1,462.00p 1.81%
Micro Focus International (MCRO) 2,596.00p 1.76%
Royal Bank of Scotland Group (RBS) 257.60p 1.66%
Kingfisher (KGF) 341.00p 1.55%

FTSE 100 - Fallers

Barclays (BARC) 212.45p -5.14%
Mediclinic International (MDC) 821.50p -4.37%
Royal Mail (RMG) 407.30p -2.77%
Hammerson (HMSO) 586.50p -1.59%
Reckitt Benckiser Group (RB.) 7,081.00p -1.57%
Standard Chartered (STAN) 729.70p -1.56%
United Utilities Group (UU.) 970.50p -1.37%
Hargreaves Lansdown (HL.) 1,388.00p -1.28%
Vodafone Group (VOD) 199.65p -1.24%
National Grid (NG.) 994.80p -1.21%

FTSE 250 - Risers

Drax Group (DRX) 325.80p 7.21%
Hastings Group Holdings (HSTG) 310.10p 4.31%
Kaz Minerals (KAZ) 510.50p 3.74%
Renishaw (RSW) 3,346.00p 3.50%
Senior (SNR) 216.30p 3.00%
Weir Group (WEIR) 2,003.00p 2.98%
Ferrexpo (FXPO) 155.80p 2.70%
Vedanta Resources (VED) 684.00p 2.70%
Evraz (EVR) 213.50p 2.64%
Balfour Beatty (BBY) 291.30p 2.53%

FTSE 250 - Fallers

Greencore Group (GNC) 220.30p -3.80%
Stagecoach Group (SGC) 201.50p -3.68%
Berendsen (BRSN) 844.00p -2.71%
Virgin Money Holdings (UK) (VM.) 324.40p -2.49%
Genus (GNS) 1,705.00p -2.07%
McCarthy & Stone (MCS) 187.20p -1.89%
Just Eat (JE.) 575.00p -1.88%
Restaurant Group (RTN) 346.80p -1.76%
Pennon Group (PNN) 855.50p -1.67%
Kennedy Wilson Europe Real Estate (KWE) 1,046.00p -1.60%