London open: Stocks gain after UK GDP data; US inflation eyed

London stocks rose in early trade on Wednesday following heavy losses in the previous session, as investors mulled the latest UK GDP reading.

At 0840 BST, the FTSE 100 was up 0.5% at 6,979.21, having slumped 2.5% on Tuesday amid fears over rising inflation.

Spreadex analyst Connor Campbell said: "Following a stark - and arguably long-awaited - plunge in equities on Tuesday, Europe attempted to pick itself up on Wednesday.

"The FTSE received an early helping hand thanks to a better-than-forecast Q1 GDP reading, showing the UK contracted by 1.5% in the lockdown-hit opening months to the year, compared to the -1.6% forecast.

"A stronger sign of recovery was news that the economy actually grew by 2.1% in March, instead of the 1.5% expected, as the country cautiously started to open up. That’ll only boost hopes of a robust rebound in the second and third quarters."

Despite the positive tone, Campbell said the gains "should be caveated as they come before this afternoon’s US inflation reading for April has been unveiled".

"And given that Monday and Tuesday’s losses can in large part be explained by fears of surging inflationary pressures, the trading landscape could look very different once the figure has been released."

In corporate news, Spirax-Sarco Engineering rallied after it said margins in the four months to 30 April were higher than expected after a rise in sales.

Diageo was also a high riser as the drinks maker said it has restarted its £4.5bn plan to return capital to shareholders after business continued to recover in the second half of its financial year.

Compass was trading up as the catering group said it expected a gradual recovery in third-quarter margins after interim profits and revenue slumped due to the coronavirus pandemic.

UDG Healthcare surged as it agreed to be bought by private equity firm Clayton, Dubilier & Rice in a £2.6bn deal, and reported a "strong" first half.

Marshalls gained after the landscape products company said trading for the full year was set to be ahead of its previous expectations amid increased demand.

On the downside, Flutter Entertainment lost ground after saying the boss of its US FanDuel operation had resigned and that his departure would affect the timing of a potential listing for the business in the US.

Tui was weaker after the travel group said it plunged to a €1.5bn (£1.3bn) first-half loss and that it expects annual revenue to fall in the current year because of travel restrictions and reduced expectations for the summer season.

4Imprint was knocked lower by a downgrade to ‘hold’ at HSBC.

Market Movers

FTSE 100 (UKX) 6,979.21 0.45%
FTSE 250 (MCX) 22,245.84 0.36%
techMARK (TASX) 4,245.18 0.05%

FTSE 100 - Risers

Spirax-Sarco Engineering (SPX) 11,865.00p 2.68%
Diageo (DGE) 3,274.00p 2.63%
Glencore (GLEN) 335.20p 2.23%
Anglo American (AAL) 3,451.00p 1.66%
Hargreaves Lansdown (HL.) 1,759.50p 1.35%
Sainsbury (J) (SBRY) 257.10p 1.26%
Rio Tinto (RIO) 6,622.00p 1.24%
Reckitt Benckiser Group (RKT) 6,327.00p 1.23%
SSE (SSE) 1,451.50p 1.19%
Barclays (BARC) 181.84p 1.02%

FTSE 100 - Fallers

Just Eat Takeaway.Com N.V. (CDI) (JET) 6,661.00p -2.25%
Flutter Entertainment (CDI) (FLTR) 13,090.00p -1.98%
Informa (INF) 545.60p -0.98%
British Land Company (BLND) 525.40p -0.79%
Next (NXT) 7,882.00p -0.63%
Smith & Nephew (SN.) 1,518.00p -0.56%
HSBC Holdings (HSBA) 437.60p -0.55%
Renishaw (RSW) 5,595.00p -0.53%
Land Securities Group (LAND) 722.20p -0.47%
Smurfit Kappa Group (CDI) (SKG) 3,721.00p -0.40%

FTSE 250 - Risers

UDG Healthcare Public Limited Company (CDI) (UDG) 1,032.00p 22.57%
Marshalls (MSLH) 750.00p 3.81%
Chemring Group (CHG) 289.50p 3.39%
Apax Global Alpha Limited (APAX) 199.00p 3.11%
Redde Northgate (REDD) 375.50p 2.88%
Games Workshop Group (GAW) 10,880.00p 2.35%
CLS Holdings (CLI) 249.00p 2.26%
BMO Global Smaller Companies (BGSC) 164.60p 2.24%
GCP Student Living (DIGS) 165.60p 2.22%
Ferrexpo (FXPO) 495.20p 2.15%

FTSE 250 - Fallers

4Imprint Group (FOUR) 2,230.00p -4.09%
Hammerson (HMSO) 36.61p -2.50%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,661.00p -2.25%
TUI AG Reg Shs (DI) (TUI) 419.20p -1.96%
Provident Financial (PFG) 239.20p -1.56%
Mediclinic International (MDC) 287.20p -1.24%
Tullow Oil (TLW) 52.90p -1.23%
JPMorgan Euro Small Co. Trust (JESC) 481.00p -1.23%
Beazley (BEZ) 319.20p -1.02%
Vectura Group (VEC) 117.80p -1.01%