London close: Stocks end higher as pound weakens against dollar
The FTSE 100 ended Thursday’s session higher even as the pound weakened against the dollar on worries about future UK economic growth, with banks tracking gains on yields for longer-dated Gilts.
London’s top tier index closed up 0.41% to 6,986.57 points while the pound fell 0.69% to $1.2162.
Gross domestic product rose 0.5% quarter-on-quarter in the three months to September, slowing from 0.7% in the quarter to June, the Office for National Statistics revealed.
However, it was considerably higher than the 0.3% economists had expected.
Compared to a year ago, third quarter GDP increased 2.3% following a 2.1% year-on-year increase in the second quarter. Analysts had expected no change to the annualised figure.
It was the first ONS release on GDP to cover a full quarter since the UK voted to leave the European Union on 23 June. However, many analysts believe the economy faces a further slowdown in 2017 when Prime Minister Theresa May invokes Article 50, which would trigger the formal Brexit process.
Connor Campbell, financial analyst at Spreadex said the slide in the pound suggests that "despite the positive surprise across the third quarter investors are still worried about Britain’s growth prospects, especially in 2017”.
Acting as a backdrop, the yield on the benchmark 10-year Gilt jumped 10 basis points to 1.25% - and hit a post-Brexit high of 1.29% at one point during the session.
Elsewhere, data showed a decline in Chinese industrial profit growth last month. Figures released earlier by the National Bureau of Statistics revealed profits in September were up 7.7% to 577.1bn yuan, slowing significantly from a 19.5% increase in September.
In the US, data from the Labor Department showed that initial jobless claims declined by 3,000 to 258,000 from an upwardly-revised 261,000, economists had expected a drop to 255,000.
This was the 86th consecutive week of initial claims below 300,000 – the longest streak since 1970.
The Commerce Department revealed orders for US durable goods, products such as cars and computers which are designed to last more than three years, fell 0.1% to £227.3bn in September from the previous month, which was close to the 0.0% consensus.
The US pending home sales index rose 1.5% month-on-month to 110.0 in September, according to the National Association of Realtors’, compared to a 2.4% drop in August. Analysts had expected a 1.1% increase.
Meanwhile, oil prices rose after the Energy Information Administration late on Wednesday said crude inventories fell 553,000 barrels in the week ended 21 October. Brent crude jumped 1.08% to $50.53 per barrel and West Texas Intermediate gained 1.06% to $49.71 per barrel at 1640 BST.
Barclays was the standout gainer after reporting a rise in third-quarter pre-tax profit as it benefited from a strong performance in its fixed trading division.
Information and analytics company Relx Group advanced after saying its outlook remains unchanged and it expects underlying revenue, profit and earnings to increase for the full year.
Lloyds was on the front foot as the government cut its stake in the bank to just under 9%, or 6.42bn shares from 7.1bn previously. It also received a positive endorsement from analysts at UBS who nudged their target price on the stock higher.
On the downside, airlines flew lower. International Consolidated Airlines Group slumped after Societe Generale downgraded its stance on the British Airways and Iberia parent company to ‘hold’ from ‘buy’ and cut the price target to 420p from 500p.
Peer easyJet also lost ground.
BT Group was under the cosh following the release of its second-quarter results amid concerns about its pension deficit, which grew to £9.5bn from £6.2bn.
Barratt Developments, Wolseley and Provident Financial declined as their shares went ex-dividend.
Market Movers
FTSE 100 (UKX) 6,986.57 0.41%
FTSE 250 (MCX) 17,581.32 -0.50%
techMARK (TASX) 3,399.00 -0.36%
FTSE 100 - Risers
Barclays (BARC) 190.50p 4.79%
Lloyds Banking Group (LLOY) 57.50p 2.90%
ITV (ITV) 172.10p 2.81%
Sky (SKY) 820.50p 2.43%
Relx plc (REL) 1,462.00p 2.31%
Royal Dutch Shell 'B' (RDSB) 2,170.50p 1.64%
Royal Dutch Shell 'A' (RDSA) 2,081.50p 1.61%
Next (NXT) 4,806.00p 1.61%
Reckitt Benckiser Group (RB.) 7,319.00p 1.60%
Imperial Brands (IMB) 3,938.00p 1.48%
FTSE 100 - Fallers
Barratt Developments (BDEV) 438.90p -7.77%
AstraZeneca (AZN) 4,614.50p -3.40%
Wolseley (WOS) 4,209.00p -3.31%
Provident Financial (PFG) 2,964.00p -2.53%
British Land Company (BLND) 578.00p -2.45%
easyJet (EZJ) 921.00p -2.44%
International Consolidated Airlines Group SA (CDI) (IAG) 413.20p -2.25%
BT Group (BT.A) 379.25p -2.15%
Land Securities Group (LAND) 985.00p -1.89%
Dixons Carphone (DC.) 315.50p -1.77%
FTSE 250 - Risers
Fidessa Group (FDSA) 2,465.00p 7.36%
Kaz Minerals (KAZ) 302.10p 6.82%
Vesuvius (VSVS) 365.10p 4.85%
Rank Group (RNK) 196.40p 4.75%
Euromoney Institutional Investor (ERM) 1,044.00p 3.37%
CLS Holdings (CLI) 1,573.00p 3.35%
FirstGroup (FGP) 111.70p 3.14%
Debenhams (DEB) 55.35p 3.07%
Brown (N.) Group (BWNG) 192.40p 2.67%
Ocado Group (OCDO) 280.70p 2.37%
FTSE 250 - Fallers
Amec Foster Wheeler (AMFW) 465.90p -20.43%
Berendsen (BRSN) 1,030.00p -16.33%
Galliford Try (GFRD) 1,210.00p -7.28%
Petrofac Ltd. (PFC) 828.00p -4.72%
Shawbrook Group (SHAW) 227.40p -3.07%
Sophos Group (SOPH) 224.40p -3.03%
Henderson Group (HGG) 231.50p -2.89%
Petra Diamonds Ltd.(DI) (PDL) 153.90p -2.59%
NCC Group (NCC) 197.40p -2.42%
Virgin Money Holdings (UK) (VM.) 326.30p -2.31%