London open: FTSE gains as miners rally; GDP disappoints

London stocks rose in early trade on Monday thanks to a strong showing in the mining sector, as investors mulled weaker-than-expected UK GDP data.

At 0845 BST, the FTSE 100 was up 0.7% at 7,400.52, while sterling was 0.9% firmer against the dollar at 1.1690.

Figures released earlier by the Office for National Statistics showed that GDP rose 0.2% in July following a 0.6% decline in June, coming in below economists’ expectations of 0.5% growth.

The services sector was the main driver of the rise in GDP, with growth of 0.4% in July, up from 0.5% the month before.

Meanwhile, production contracted by 0.3% following a 0.9% decline in June, mainly due to a fall of 3.4% in electricity, gas, steam, and air conditioning supply. Construction fell 0.8% in July following a 1.4% contraction the month before. This came solely from repair and maintenance, which fell 2.6%.

This marked the second consecutive contraction for production and construction.

The ONS said monthly GDP is now estimated to be 1.1% above its pre-Covid level in February 2020.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Looking ahead, the extra public holiday for the Queen’s funeral on September 19 has the potential to be more damaging for the economy than the extra day off for the Jubilee in June, as the hospitality and tourism sector likely won’t benefit, but many businesses still will shut. That said, many businesses will be able to catch up work, as most of them did in June. Similar events in the past also had minimal impact on consumers’ confidence and their spending decisions.

"For now, then, we’re pencilling in a 0.2% hit to the level of GDP in September from the funeral. That suggests that a technical recession - widely defined as two quarters of declining GDP- is hanging in the balance, given that business surveys have weakened since July and are consistent with GDP merely holding steady in Q3. Nonetheless, households’ real disposable incomes likely will recover over the coming quarters, now that the government has capped energy prices, maintained previously announced grants, and likely will reverse April’s National Insurance hike soon."

In equity markets, miners were the standout gainers as metals prices rose, with Anglo American, Glencore and Rio Tinto all higher.

Residential property business Grainger rose as it said rents had grown 4.5% year-to-date on a like-for-like basis amid "strong" rental market conditions in the second half of the trading year.

On the downside, government contractor Serco fell as it said chief executive Rupert Soames would retire in September 2023 and step down both from the board at the end of this December 2022. He will be succeeded by Mark Irwin, who is currently the CEO of Serco's UK & Europe Division.

Tate & Lyle was knocked lower by a downgrade to ‘hold’ at Jefferies.

Ladbrokes owner Entain was in focus Australia's financial crimes regulator said it would be investigating the company’s compliance with anti-money laundering and counter-terrorism financing laws.

Market Movers

FTSE 100 (UKX) 7,400.52 0.67%
FTSE 250 (MCX) 19,274.06 0.45%
techMARK (TASX) 4,318.23 0.43%

FTSE 100 - Risers

Anglo American (AAL) 3,000.50p 2.53%
Glencore (GLEN) 498.70p 2.11%
Tesco (TSCO) 244.90p 2.08%
Smurfit Kappa Group (CDI) (SKG) 2,952.00p 1.90%
Barclays (BARC) 172.00p 1.87%
Rolls-Royce Holdings (RR.) 79.89p 1.85%
Sainsbury (J) (SBRY) 206.30p 1.83%
NATWEST GROUP (NWG) 265.40p 1.76%
Mondi (MNDI) 1,492.00p 1.67%
Flutter Entertainment (CDI) (FLTR) 10,400.00p 1.61%

FTSE 100 - Fallers

M&G (MNG) 200.40p -1.81%
Melrose Industries (MRO) 125.90p -1.14%
London Stock Exchange Group (LSEG) 7,964.00p -0.50%
Aveva Group (AVV) 2,932.00p -0.41%
Imperial Brands (IMB) 1,945.00p -0.38%
AstraZeneca (AZN) 10,464.00p -0.34%
Barratt Developments (BDEV) 420.80p -0.33%
Taylor Wimpey (TW.) 108.00p -0.32%
Reckitt Benckiser Group (RKT) 6,550.00p -0.27%
Rightmove (RMV) 628.40p -0.25%

FTSE 250 - Risers

Ferrexpo (FXPO) 183.40p 17.49%
NCC Group (NCC) 234.00p 6.61%
Marks & Spencer Group (MKS) 121.25p 3.06%
TUI AG Reg Shs (DI) (TUI) 142.15p 2.86%
HGCapital Trust (HGT) 378.00p 2.58%
Darktrace (DARK) 388.60p 2.48%
Tritax Eurobox (GBP) (EBOX) 81.80p 2.25%
Bridgepoint Group (Reg S) (BPT) 264.80p 2.24%
Hochschild Mining (HOC) 64.30p 2.06%
Workspace Group (WKP) 529.00p 2.03%

FTSE 250 - Fallers

Tate & Lyle (TATE) 727.80p -4.39%
Serco Group (SRP) 174.20p -3.33%
Abrdn Private Equity Opportunities Trust (APEO) 421.00p -2.55%
Games Workshop Group (GAW) 7,340.00p -2.13%
National Express Group (NEX) 184.40p -1.65%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 500.00p -1.57%
JPMorgan American Inv Trust (JAM) 762.00p -1.42%
Impax Environmental Markets (IEM) 436.50p -1.36%
Safestore Holdings (SAFE) 1,016.00p -1.17%
Vistry Group (VTY) 791.50p -1.06%