London open: Stocks edge lower after GDP, retail sales data

London stocks edged lower in early trade on Friday as a downward revision to UK GDP data raised the risk of recession, although retail sales figures were better than expected.

At 0840 GMT, the FTSE 100 was down 0.1% at 7,684.06. Markets will be open for just a half day’s trading as we head towards the Christmas break.

Data released earlier by the Office for National Statistics showed the economy contracted by 0.1% in the period from July to September, down from a previous estimate of no growth.

The services sector contracted 0.2%, revised down from a first estimate of a 0.1% decline.

The data also showed that there was no economic growth in the second quarter, down from a previous estimate of 0.2% growth.

Darren Morgan, director of economic statistics at the ONS, said: "The latest data from both our regular monthly business survey and VAT returns show the economy performed slightly less well in the last two quarters than our initial estimates. The broader picture, though, remains one of an economy that has been little changed over the last year.

"The latest VAT data, which takes a little time to receive and process means we now estimate the economy showed no growth in the second quarter, with weaker performances from smaller businesses, particularly those in both hospitality and IT than first shown.

"We also now estimate the economy contracted slightly in the third quarter, when we previously reported no growth, with later returns from our business survey showing film production, engineering & design and telecommunications all performing a little worse than we initially thought."

Ashley Webb, UK economist at Capital Economics, said: "The 0.1% q/q fall in real GDP in Q3 may mean that the mildest of mild recessions started in Q3. But whether or not there is a small recession, the big picture is that we expect real GDP growth to remain subdued throughout 2024."

Separate figures released by the ONS showed that retail sales volumes rose 1.3% in November, coming in ahead of consensus expectations for 0.4% growth and following no growth in October. The ONS said sales were boosted by heavily-discounted Black Friday deals

The previous month’s data was revised up from a 0.3% fall.

Morgan said: "Retail sales grew strongly in November as heavy Black Friday discounting encouraged shoppers to spend. However, with the three-month trend continuing to fall and overall sales still below pre-pandemic levels, it’s still a challenging time for retailers.

"In the latest month, household goods retailers, clothing shops and department stores all reported robust sales, with computer stores, sports equipment, toy shops and cosmetics stores particularly benefitting from the impact of their Black Friday promotions.

"Supermarket sales ticked up a little, but it was specialist food and drink stores that had a really strong November due to customers stocking up early for Christmas and spending more than we have traditionally seen at this time of year."

In equity markets, JD Sports slid after Nike downgraded its revenue outlook and announced plans to cut costs by about $2bn over the next three years. Sports Direct owner Frasers Group was also in the red.

Elsewhere, the Canadian government has approved the $13.5bn takeover of HSBC Canada by RBC, allowing the sale to proceed despite calls for it to be blocked over fears of reduced competition in the sector.

Market Movers

FTSE 100 (UKX) 7,684.06 -0.14%
FTSE 250 (MCX) 19,541.92 -0.15%
techMARK (TASX) 4,293.98 0.19%

FTSE 100 - Risers

Airtel Africa (AAF) 129.30p 1.25%
Burberry Group (BRBY) 1,443.00p 0.98%
Antofagasta (ANTO) 1,717.00p 0.67%
IMI (IMI) 1,707.00p 0.41%
Imperial Brands (IMB) 1,817.50p 0.39%
BP (BP.) 468.05p 0.39%
Reckitt Benckiser Group (RKT) 5,446.00p 0.37%
Kingfisher (KGF) 245.70p 0.33%
Fresnillo (FRES) 583.20p 0.31%
Lloyds Banking Group (LLOY) 47.33p 0.29%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 165.35p -4.94%
Frasers Group (FRAS) 906.00p -2.48%
Ocado Group (OCDO) 739.40p -2.35%
Prudential (PRU) 860.80p -1.49%
B&M European Value Retail S.A. (DI) (BME) 569.20p -1.18%
Spirax-Sarco Engineering (SPX) 10,390.00p -1.00%
Associated British Foods (ABF) 2,353.00p -0.93%
AstraZeneca (AZN) 10,384.00p -0.92%
Intermediate Capital Group (ICP) 1,677.00p -0.89%
Smurfit Kappa Group (CDI) (SKG) 3,170.00p -0.88%

FTSE 250 - Risers

Volution Group (FAN) 446.20p 4.40%
Baltic Classifieds Group (BCG) 249.50p 3.96%
Tritax Eurobox (GBP) (EBOX) 61.90p 3.69%
Harbour Energy (HBR) 305.30p 3.32%
Moneysupermarket.com Group (MONY) 281.20p 2.55%
Hammerson (HMSO) 28.30p 1.29%
Bluefield Solar Income Fund Limited (BSIF) 116.40p 1.22%
Hochschild Mining (HOC) 104.60p 1.16%
Smithson Investment Trust (SSON) 1,388.00p 0.95%
Darktrace (DARK) 351.60p 0.86%

FTSE 250 - Fallers

Fidelity China Special Situations (FCSS) 200.50p -2.91%
Mobico Group (MCG) 73.70p -2.58%
Watches of Switzerland Group (WOSG) 681.00p -2.51%
Ferrexpo (FXPO) 78.90p -2.41%
Genuit Group (GEN) 390.00p -2.38%
Travis Perkins (TPK) 828.80p -2.26%
FDM Group (Holdings) (FDM) 448.00p -1.97%
HGCapital Trust (HGT) 424.50p -1.96%
Moonpig Group (MOON) 162.00p -1.76%
Energean (ENOG) 1,020.00p -1.73%