London open: Stocks fall as UK economy contracts by record 9.9% in 2020

London stocks fell in early trade on Friday as investors mulled the latest UK GDP data, with travel and leisure issues under the cosh.

At 0900 GMT, the FTSE 100 was 0.4% lower at 6,505.52, while sterling was down 0.3% against the dollar at 1.3780 after figures from the Office for National Statistics showed the economy contracted by a record 9.9% last year as the coronavirus pandemic took its toll, but avoided a double-dip recession.

In the fourth quarter, GDP rose 1%, following 16.1% growth in the third quarter.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "The UK may have swerved a technical double dip recession, but the record breaking annual fall in economic output underlines the damage wreaked by Covid on businesses up and down the country.

"The temporary reprieve from lockdown in December gave a leg up to the services industry which grew by 1.7%, helping push overall growth up to 1.2% in December slightly higher than expected.

"But the economy is almost 10% smaller than it was before the pandemic hit. There is still a mountain to climb in this recovery and there will be a lot more pain to come given the current nationwide shutdowns."

She added that with no road map yet laid out to the re-opening of the economy, "it’s hard to see the light at the end of the tunnel when the tunnel keeps getting longer".

In equity markets, travel and leisure stocks were the worst performers, with British Airways parent IAG, engine maker Rolls-Royce, InterContinental Hotels, pub groups Mitchells & Butlers and Wetherspoons, cruise operator Carnival, holiday company TUI and budget airline easyJet all weaker.

CMC Markets analyst Michael Hewson said that as far as the airline sector is concerned, it is becoming "increasingly apparent that the summer holiday season this year is likely to see the UK population confined to the home market, with very restricted access to holidays abroad".

Elsewhere, Victrex fell despite saying that first-quarter revenues and sales were slightly ahead of expectations as the polymer maker maintained full-year guidance.

On the upside, Vivo Energy gained after saying it expects full-year adjusted earnings before interest, tax, depreciation and amortisation to be above the top end of the range of consensus expectations of between $331m and $354m.

Market Movers

FTSE 100 (UKX) 6,505.52 -0.36%
FTSE 250 (MCX) 20,919.72 -0.47%
techMARK (TASX) 4,113.46 -0.18%

FTSE 100 - Risers

Admiral Group (ADM) 3,012.00p 1.01%
Unilever (ULVR) 3,942.00p 1.00%
AstraZeneca (AZN) 7,316.00p 0.97%
Severn Trent (SVT) 2,321.00p 0.91%
Ferguson (FERG) 8,984.00p 0.88%
Rentokil Initial (RTO) 517.00p 0.86%
Coca-Cola HBC AG (CDI) (CCH) 2,385.00p 0.85%
St James's Place (STJ) 1,186.50p 0.64%
Hikma Pharmaceuticals (HIK) 2,309.00p 0.61%
Entain (ENT) 1,350.00p 0.60%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 145.50p -2.28%
NATWEST GROUP PLC ORD 100P (NWG) 168.45p -2.18%
Polymetal International (POLY) 1,575.50p -1.90%
Fresnillo (FRES) 1,013.00p -1.70%
Rolls-Royce Holdings (RR.) 91.06p -1.66%
Glencore (GLEN) 265.05p -1.65%
Compass Group (CPG) 1,380.00p -1.64%
InterContinental Hotels Group (IHG) 4,849.00p -1.54%
Antofagasta (ANTO) 1,517.00p -1.49%
Aviva (AV.) 345.20p -1.40%

FTSE 250 - Risers

Vivo Energy (VVO) 82.50p 5.50%
Apax Global Alpha Limited (APAX) 208.50p 2.71%
Diploma (DPLM) 2,508.00p 2.20%
Fidelity China Special Situations (FCSS) 491.50p 1.44%
Bellway (BWY) 2,952.00p 1.37%
Marks & Spencer Group (MKS) 131.20p 1.35%
Bankers Inv Trust (BNKR) 1,130.00p 1.25%
Beazley (BEZ) 357.60p 1.07%
Redrow (RDW) 567.50p 1.07%
Oxford Instruments (OXIG) 2,015.00p 1.05%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 313.00p -6.85%
Carnival (CCL) 1,248.00p -4.04%
TUI AG Reg Shs (DI) (TUI) 309.80p -4.00%
easyJet (EZJ) 734.60p -3.67%
Watches of Switzerland Group (WOSG) 622.00p -2.81%
Hochschild Mining (HOC) 214.80p -2.81%
Wetherspoon (J.D.) (JDW) 1,188.00p -2.46%
FirstGroup (FGP) 76.00p -2.38%
WH Smith (SMWH) 1,538.00p -2.35%
Petrofac Ltd. (PFC) 117.25p -2.25%