London midday: Stocks flat after UK GDP fails to inspire

The FTSE 100 was flat on Thursday at midday after official data showed the UK economy slowed in the third quarter, albeit less than expected.

Gross domestic product rose 0.5% quarter-on-quarter in the three months to September, slowing from 0.7% in the quarter to June, the Office for National Statistics revealed.

However, it was better than the 0.3% economists had expected.

Compared to a year ago, third quarter GDP increased 2.3% following a 2.1% year-on-year increase in the second quarter. Analysts had expected no change to the annualised figure.

The ONS said a 0.8% expansion in the service industries was offset by a decrease in output in industrial groups including a 1.4% fall in construction, a 0.7% dip in agriculture and a 1.0% slide in manufacturing.

It was the first ONS release on GDP to cover a full quarter since the UK voted to leave the European Union on 23 June. However, many analysts noted that Prime Minister Theresa May is yet to invoke Article 50, which would trigger the formal Brexit process.

“Coming in at 0.5% against the 0.3% forecast, it seems that in the aftermath of the Brexit Britain’s economy showed a surprising amount of resilience – why, then, the rather lacklustre reaction from investors?” said Connor Campbell, financial analyst at Spreadex.

“Well, firstly, the growth was driven almost entirely by the services sector, with manufacturing and construction continuing to contract, confirming, if it needed confirming, that George Osborne’s ‘March of the Makers’ was a snappy title and nothing more.

“Secondly, the immediate reaction from analysts tended not to be one of joy, but of caution; 2017 is set to see inflation rapidly expand, something that will put increasing pressure on Britain’s growth. In other words, given its proximity to the vote, the third quarter GDP is almost as unhelpful as its second quarter counterpart in providing an insight into the chances of Britain’s economy once it eventually completes its EU-divorce.”

The pound rose 0.04% to $1.2252 following the report.

Turning to afternoon trade, a slate of US data will be published including durable goods orders at 1330 BST, initial jobless claims at 1330 BST and pending home sales at 1500 BST.

Meanwhile, oil prices rose after the Energy Information Administration late on Wednesday said crude inventories fell 553,000 barrels in the week ended 21 October. However, investors continued to worry that OPEC will be unable to clinch a deal on a production curb next month after Iraq expressed its unwillingness to participate.

At 1130 BST Brent crude increased 0.69% to $50.33 per barrel and West Texas Intermediate edged up 0.44% to $49.40 per barrel.

Among corporate stocks, Barclays was the standout riser after reporting a 35% increase in pre-tax profit in the third quarter to £837m as revenue from fixed income surged 40% to £947m.

RELX Group gained after the information and analytics company said it expects underlying revenue, profit and earnings to increase for the full-year as it reported a 4% increase in underlying revenue in the first nine months of the year.

Department store chain Debenhams was sitting higher after reporting a 0.5% increase in underlying full-year pre-tax profit to £114.1m.

BT Group shares slumped after it reported a 10% drop in earnings per share to 5.7p in the second quarter as the recent weakness in sterling continued to impact on results.

International Consolidated Airlines was also on the back foot after JP Morgan Cazenove reiterated an ‘underweight’ rating and cut the target price to €5.00 from €5.60 on its shares traded on the Bolsa de Madrid exchange, saying it is one of the most exposed airlines to the Brexit vote.

Market Movers

FTSE 100 (UKX) 6,959.76 0.02%
FTSE 250 (MCX) 17,554.77 -0.65%
techMARK (TASX) 3,411.15 -0.01%

FTSE 100 - Risers

Barclays (BARC) 184.95p 1.73%
Relx plc (REL) 1,447.00p 1.26%
Sage Group (SGE) 721.00p 1.12%
Imperial Brands (IMB) 3,923.00p 1.10%
GKN (GKN) 315.40p 1.09%
AstraZeneca (AZN) 4,824.50p 0.99%
Lloyds Banking Group (LLOY) 56.32p 0.79%
British American Tobacco (BATS) 4,618.00p 0.76%
Fresnillo (FRES) 1,620.00p 0.75%
Reckitt Benckiser Group (RB.) 7,256.00p 0.72%

FTSE 100 - Fallers

Barratt Developments (BDEV) 431.20p -9.39%
BT Group (BT.A) 375.60p -3.10%
Wolseley (WOS) 4,239.00p -2.62%
Provident Financial (PFG) 2,962.00p -2.60%
International Consolidated Airlines Group SA (CDI) (IAG) 411.80p -2.58%
Persimmon (PSN) 1,650.00p -2.48%
British Land Company (BLND) 578.00p -2.45%
easyJet (EZJ) 921.00p -2.44%
Taylor Wimpey (TW.) 138.20p -2.19%
Land Securities Group (LAND) 983.50p -2.04%

FTSE 250 - Risers

Fidessa Group (FDSA) 2,462.00p 7.23%
Vesuvius (VSVS) 370.00p 6.26%
Kaz Minerals (KAZ) 295.00p 4.31%
Debenhams (DEB) 55.50p 3.35%
Big Yellow Group (BYG) 703.50p 2.40%
Halma (HLMA) 1,051.00p 2.34%
Brown (N.) Group (BWNG) 191.10p 1.97%
FirstGroup (FGP) 110.00p 1.57%
Auto Trader Group (AUTO) 371.60p 1.53%
Stagecoach Group (SGC) 201.70p 1.41%

FTSE 250 - Fallers

Amec Foster Wheeler (AMFW) 474.90p -18.89%
Berendsen (BRSN) 1,022.00p -16.98%
Galliford Try (GFRD) 1,218.00p -6.67%
Hunting (HTG) 489.30p -3.59%
Hill & Smith Holdings (HILS) 1,034.00p -3.00%
Keller Group (KLR) 677.50p -2.80%
Bellway (BWY) 2,341.00p -2.62%
Petrofac Ltd. (PFC) 846.50p -2.59%
Petra Diamonds Ltd.(DI) (PDL) 154.00p -2.53%
Marshalls (MSLH) 262.10p -2.42%