London close: FTSE ends flat as US economic growth slows
The FTSE 100 ended broadly flat on Thursday as US economic growth slowed in the first quarter and as investors continued to weigh central bank policy decisions in the US and Japan.
US economic growth slowed to an annual rate of 0.5% in the first quarter from the 1.4% rate enjoyed in the fourth quarter of 2016, the Commerce Department revealed. Analysts had forecast a 0.6% increase.
“We remain very skeptical of the growth number, which has been depressed temporarily by the stock market plunge in Jan, persistent seasonal adjustment problems which reduce Q1 growth but boost Q2, and the very early Easter, which has hit an array of March data, all of which will rebound in April,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
“The Fed pointed out yesterday that the labour market has continued to improve despite the apparent slowing in growth, perhaps suggesting that they, too, are suspicious of the GDP data.”
The Federal Reserve on Wednesday decided to keep interest rates unchanged at 0.25% to 0.50%, as expected, but left the door open to a rate increase at the next meeting in June.
The Bank of Japan also announced its policy, shocking the market by refraining from any extra stimulus measures to bolster the stagnant economy. The BoJ decided to keep its negative interest rate of -0.10% in place and voted to continue its asset purchase programme.
Alongside the BoJ’s policy announcement, official data showed annualised deflation of 0.1% in March, compared to inflation of 0.3% the previous month. In better news, the jobless rate unexpectedly fell to 3.2% in March from 3.3% in February.
Meanwhile, oil prices gained with Brent crude up 1.04% to $47.68 per barrel and West Texas Intermediate up 0.54% to $45.58 per barrel at 1632 BST.
In company news, shares in ITV, Legal & General, Informa and Relx were all firmly in the red as the stock went ex-dividend.
Lloyds Banking Group was under pressure after reporting a 6% drop in first-quarter underlying profit, although this was better than forecast as a reduction in impairment charges, PPI provisions and lower costs counterbalanced a small decline in income.
Royal Bank of Scotland was also on the back foot after saying it was likely to miss the 2017 deadline to spin off its Williams & Glyn subsidiary, laying the bank open to a “significantly greater” financial impact than hoped.
Anglo American bucked the trend, boosted by an agreement to sell its niobium and phosphates businesses in Brazil to China Molybdenum for a cash consideration of $1.5bn.
Taylor Wimpey gained after the company said the prospect of a British exit from the EU had not affected trading in the first four months of the year.
Tullow Oil rallied after saying 2016 capital expenditure would be cut by $100m to $1bn “with further savings expected”.
Weir Group jumped as it reported trading that was “slightly ahead” of expectations in its first quarter on Thursday.
Market Movers
FTSE 100 (UKX) 6,322.40 0.04%
FTSE 250 (MCX) 17,066.45 -0.10%
techMARK (TASX) 3,093.97 -0.25%
FTSE 100 - Risers
Anglo American (AAL) 753.20p 8.08%
Rio Tinto (RIO) 2,329.50p 4.27%
Rolls-Royce Holdings (RR.) 694.00p 3.12%
Randgold Resources Ltd. (RRS) 6,525.00p 2.27%
Glencore (GLEN) 156.45p 2.25%
BHP Billiton (BLT) 945.70p 2.11%
Fresnillo (FRES) 1,095.00p 2.05%
Direct Line Insurance Group (DLG) 359.10p 1.96%
ARM Holdings (ARM) 965.00p 1.90%
Morrison (Wm) Supermarkets (MRW) 192.80p 1.85%
FTSE 100 - Fallers
Legal & General Group (LGEN) 227.20p -4.42%
ITV (ITV) 225.60p -3.51%
St James's Place (STJ) 881.00p -2.97%
Royal Bank of Scotland Group (RBS) 244.80p -2.90%
Associated British Foods (ABF) 3,068.00p -2.88%
Merlin Entertainments (MERL) 435.30p -2.40%
Informa (INF) 654.50p -1.73%
Berkeley Group Holdings (The) (BKG) 3,066.00p -1.67%
Lloyds Banking Group (LLOY) 68.11p -1.65%
Provident Financial (PFG) 2,918.00p -1.59%
FTSE 250 - Risers
Tullow Oil (TLW) 280.60p 11.98%
Weir Group (WEIR) 1,213.00p 7.73%
Ophir Energy (OPHR) 91.90p 6.86%
Telecom Plus (TEP) 999.00p 3.89%
Centamin (DI) (CEY) 112.50p 3.59%
Cairn Energy (CNE) 231.30p 3.49%
Acacia Mining (ACA) 343.10p 3.37%
Aggreko (AGK) 1,115.00p 3.15%
Vedanta Resources (VED) 424.70p 2.86%
NCC Group (NCC) 272.20p 2.83%
FTSE 250 - Fallers
Cobham (COB) 163.10p -7.43%
IP Group (IPO) 176.30p -7.16%
Victrex plc (VCT) 1,414.00p -6.85%
Ted Baker (TED) 2,465.00p -4.58%
Tullett Prebon (TLPR) 343.00p -4.33%
Millennium & Copthorne Hotels (MLC) 462.70p -4.22%
Kaz Minerals (KAZ) 174.10p -3.95%
Indivior (INDV) 161.70p -3.80%
Elementis (ELM) 219.20p -3.48%
International Personal Finance (IPF) 277.50p -3.43%