London open: Stocks fall amid US debt default worries, after German GDP

London stocks fell in early trade on Thursday as worries about a potential US debt default and news that Germany had fallen into recession dented sentiment.

At 0900 BST, the FTSE 100 was down 0.6% at 7,581.55.

Richard Hunter, head of markets at Interactive Investor, said: "With the debt ceiling deadline rapidly approaching and in the absence of a resolution to the current impasse, global markets are beginning to buckle.

"Whereas the previous view had been that a deal was imminent, sentiment has shifted to reflect the unthinkable possibility of a default which would send shockwaves through the global financial system.

"Treasury Secretary Yellen added to the discomfort with her view that a potential early June default had become ‘highly likely’, with the continuing lack of progress likely to loom large in investor positioning. Quite apart from the nervousness in equities, bonds are also repricing to suggest that markets should prepare for the worst unless a last-ditch reprieve can be found."

German data added to the downbeat mood, as it showed the economy entered a technical recession in the first quarter of this year, as households tightened spending.

GDP was revised downwards to -0.3% for the first three months of the year from an initial reading of zero.

Europe’s biggest economy recorded a 0.5% contraction in the last quarter of 2022. Two consecutive quarters of negative growth mark a technical recession.

In equity markets, ex-dividends weighed, with Kingfisher, Coca-Cola HBC, Imperial Brands, Whitbead, DCC, Diversified Energy, TI Fluid Systems and Britvic all lower.

Johnson Matthey was also in the red as it reported a fall in annual profit as lower average precious metal prices and higher costs hit the bottom line.

Pets at Home lost ground even as it hailed a record full-year performance, posting a jump in underlying pre-tax profit and revenue.

On the upside, office space provider Workspace advanced despite saying that it swung to a full-year loss due to a drop in its property valuation.

Hill & Smith was a high riser as it said full-year operating profit was set to be "modestly ahead" of the top end of analyst expectations following a strong start to the year.

Food and beverage maker Tate & Lyle gained as it posted a surge in annual profits and sales, driven by higher prices on the back of soaring inflation.

Market Movers

FTSE 100 (UKX) 7,581.55 -0.60%
FTSE 250 (MCX) 18,848.83 -0.43%
techMARK (TASX) 4,592.24 -0.18%

FTSE 100 - Risers

Scottish Mortgage Inv Trust (SMT) 656.40p 1.80%
Centrica (CNA) 115.50p 1.67%
Admiral Group (ADM) 2,298.00p 0.83%
Flutter Entertainment (CDI) (FLTR) 15,695.00p 0.61%
Experian (EXPN) 2,794.00p 0.32%
F&C Investment Trust (FCIT) 875.00p 0.23%
Pershing Square Holdings Ltd NPV (PSH) 2,694.00p 0.22%
Smith & Nephew (SN.) 1,232.50p 0.20%
Compass Group (CPG) 2,192.00p 0.18%
BAE Systems (BA.) 952.40p 0.17%

FTSE 100 - Fallers

Kingfisher (KGF) 227.90p -5.24%
Coca-Cola HBC AG (CDI) (CCH) 2,381.00p -4.76%
DCC (CDI) (DCC) 4,685.00p -3.76%
Johnson Matthey (JMAT) 1,797.50p -3.41%
Frasers Group (FRAS) 682.00p -3.33%
Imperial Brands (IMB) 1,744.50p -2.92%
Intertek Group (ITRK) 4,224.00p -2.52%
Abrdn (ABDN) 196.70p -2.48%
Whitbread (WTB) 3,210.00p -2.13%
JD Sports Fashion (JD.) 147.55p -1.93%

FTSE 250 - Risers

Workspace Group (WKP) 497.20p 3.84%
Helios Towers (HTWS) 97.50p 3.17%
Hill and Smith (HILS) 1,408.00p 3.07%
Bakkavor Group (BAKK) 97.00p 2.75%
Polar Capital Technology Trust (PCT) 2,120.00p 2.66%
Darktrace (DARK) 294.40p 2.36%
Tate & Lyle (TATE) 801.50p 2.17%
Bytes Technology Group (BYIT) 453.00p 2.03%
Allianz Technology Trust (ATT) 243.00p 1.89%
Urban Logistics Reit (SHED) 141.00p 1.88%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 90.85p -3.25%
Currys (CURY) 52.30p -3.15%
Tritax Eurobox (GBP) (EBOX) 61.10p -3.02%
Jupiter Fund Management (JUP) 110.20p -2.99%
ASOS (ASC) 423.10p -2.96%
Inchcape (INCH) 767.50p -2.85%
Ashmore Group (ASHM) 226.40p -2.67%
Synthomer (SYNT) 104.30p -2.34%
TI Fluid Systems (TIFS) 127.40p -2.30%
Britvic (BVIC) 896.00p -2.24%