London close: Stocks finish stronger as investors digest GDP figures

The FTSE 100 ended the session up 2.04% at 6,280.12, and the FTSE 250 was 0.51% firmer at 18,089.58.

Sterling was trading weaker by late afternoon, last slipping 0.01% against the dollar to $103047, and losing 0.49% on the euro to €1.1061.

“You wouldn’t think the FTSE had just been dealt the UK’s worst GDP reading on record, officially plunging the country back into a recession 11 years after the financial crisis,” said SpreadEx analyst Connor Campbell.

He said there were a few reasons for the FTSE’s success, with the second quarter GDP reading being “oh-so-slightly better” than forecast.

“Vaccine chatter also provided an underlying cause for optimism.

“Though it was probably news the US has bought 100 million doses of Moderna’s potential Covid-19 treatment for $1.5bn, rather than the speculation over the safety or effectiveness of Russia’s reported vaccine.”

Campbell also pointed to the open on Wall Street, where the Dow Jones added 260 points to re-cross 27950.

“The Dow had lost all of its growth by the end of yesterday’s session, and needs another spurt higher if it is to close above 28000.”

Data released earlier by the Office for National Statistics showed the economy shrank by a fifth in the second quarter of 2020 as the country sank into the deepest recession on record because of the Covid-19 crisis.

Gross domestic product dropped 20.4% in the three months to the end of June from the previous quarter.

That was bigger than reported to date by any EU member and double the fall recorded in the US.

The record drop, broadly in line with expectations, was caused by the near shutdown of the economy from late March as the government sought to stem the spread of coronavirus.

It followed a 2.2% contraction in the first three months of 2020, which covered the early stages of the virus's spread in the UK and the start of the economic shutdown.

Market participants appeared to be taking heart from the June figures, which showed that GDP increased 8.7% as shops, factories and construction sites started to reopen, although the economy is still 17.2% smaller than before the virus hit the UK.

Laura Suter, personal finance analyst at investment platform AJ Bell, said the data for June "is key, as we all knew that lockdown measures would have a big impact on the economy but what we still don’t know is how quickly the UK will rebound".

She said the 8.7% growth is encouraging, "albeit this is coming from a very low base after the falls in May and still sits far below the pre-Covid figures from February".

"But July figures are expected to be more positive still, as more businesses reopened and people emerged from their houses to start spending."

In equity markets, Admiral rallied 5.75% as the insurer reinstated its special dividend and reported a better-than-expected jump in first-half pre-tax profit after motor claims fell as drivers stayed home during lockdown.

Just Eat Takeaway was also in the black, by 3.18%, as first-half earnings and revenue grew as it benefited from lockdowns.

M&G gained 4.46% as it said first-half profit more than halved but a chunky interim dividend pleased investors.

Spirax-Sarco reversed earlier losses in a late surge to close up 0.94%, even after it said organic revenue growth in the second half of the year will be lower than it anticipated in May.

On the downside, Avast was 3% weaker after the cybersecurity firm said full-year organic revenue should be at the upper end of forecasts as it reported a strong first half driven by more people working from home during lockdown.

In broker note action, shares of British Airways and Iberia parent IAG flew 2.47% lower after a downgrade to ‘neutral’ at Davy, while Dunelm was boosted 5.26% by an initiation at ‘overweight’ by Barclays.

Market Movers

FTSE 100 (UKX) 6,280.12 2.04%
FTSE 250 (MCX) 18,089.58 0.51%
techMARK (TASX) 3,944.60 1.01%

FTSE 100 - Risers

Admiral Group (ADM) 2,708.00p 7.25%
Severn Trent (SVT) 2,589.00p 5.03%
Pennon Group (PNN) 1,100.00p 4.91%
United Utilities Group (UU.) 932.80p 4.67%
M&G (MNG) 181.40p 4.46%
Hikma Pharmaceuticals (HIK) 2,341.00p 4.18%
National Grid (NG.) 924.20p 4.10%
London Stock Exchange Group (LSE) 8,874.00p 3.84%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,998.00p 3.69%
Diageo (DGE) 2,663.50p 3.64%

FTSE 100 - Fallers

Avast (AVST) 582.00p -3.00%
International Consolidated Airlines Group SA (CDI) (IAG) 213.30p -2.47%
Whitbread (WTB) 2,532.00p -2.06%
Land Securities Group (LAND) 573.80p -2.02%
British Land Company (BLND) 373.70p -1.48%
Rolls-Royce Holdings (RR.) 272.70p -0.84%
Compass Group (CPG) 1,231.50p -0.69%
Legal & General Group (LGEN) 236.90p -0.63%
Melrose Industries (MRO) 110.00p -0.54%
InterContinental Hotels Group (IHG) 4,181.00p -0.29%

FTSE 250 - Risers

AO World (AO.) 202.00p 10.02%
Helios Towers (HTWS) 177.80p 6.47%
TBC Bank Group (TBCG) 900.00p 5.88%
Dunelm Group (DNLM) 1,382.00p 5.26%
Petropavlovsk (POG) 32.20p 4.89%
Dixons Carphone (DC.) 91.95p 4.79%
Sanne Group (SNN) 697.00p 4.19%
BMO Commercial Property Trust Limited (BCPT) 67.30p 4.18%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,998.00p 3.69%
Royal Mail (RMG) 212.20p 3.66%

FTSE 250 - Fallers

Capital & Counties Properties (CAPC) 128.00p -9.22%
Shaftesbury (SHB) 527.50p -7.78%
Trainline (TRN) 376.00p -6.79%
Carnival (CCL) 978.40p -5.10%
TUI AG Reg Shs (DI) (TUI) 367.30p -4.00%
Go-Ahead Group (GOG) 661.00p -3.92%
Coats Group (COA) 62.40p -3.58%
Meggitt (MGGT) 304.00p -3.49%
Watches of Switzerland Group (WOSG) 265.00p -3.32%
Frasers Group (FRAS) 284.60p -3.26%