London close: Stocks rise on positive UK economic data

The FTSE 100 index gained 0.64%, closing at 7,624.93 points, while the FTSE 250 rose 0.47% to reach 19,197.62 points.

In currency markets, sterling was last down 0.17% on the dollar, trading at $1.2738, while it registered a marginal decrease of 0.01% against the euro to change hands at €1.1629.

“Rising oil prices following the bombing of Houthi military targets by the US and UK in Yemen and a better-than-forecast expansion of month-on-month UK GDP growth helped the FTSE 100 to a positive close on Friday,” said IG senior market analyst Axel Rudolph.

“European equity indices also fared better than their US counterparts as these were dragged down by disappointing bank earnings and job cut announcements by Citibank on the first day of the fourth quarter earnings season.

“They recovered amid an unexpected fall in US producer prices, though.”

UK economy manages growth in November

In economic news, the UK economy showed signs of resilience as it rebounded into growth in November, according to fresh data from the Office for National Statistics.

GDP expanded by 0.3%, surpassing economists' expectations of a 0.2% increase, following a 0.3% contraction in October.

The recovery was primarily driven by a 0.4% expansion in the services sector, which had contracted by 0.1% in the previous month.

However, when considering the three months leading up to November, GDP was estimated to have declined by 0.2%, slightly worse than the anticipated 0.1% drop.

“The economy contracted a little over the three months to November, with widespread falls across manufacturing industries, which were partially offset by increases in public services, which saw less impact from strike action,” said ONS chief economist Grant Fitzner.

“GDP bounced back in the month of November, however, led by services with retail, car leasing and computer games companies all having a buoyant month.

“The longer-term picture remains one of an economy that has shown little growth over the last year.”

On the geopolitical front, in response to recent attacks on commercial shipping in the Red Sea, the US, in collaboration with the UK, Australia, Bahrain, Canada and the Netherlands, launched strikes against Houthi militant targets in Yemen overnight.

The actions were reportedly taken to protect freedom of navigation in one of the world's critical waterways.

US president Joe Biden emphasised that the strikes were a direct response to Houthi attacks against international maritime vessels, including the unprecedented use of anti-ship ballistic missiles.

UK prime minister Rishi Sunak confirmed the Royal Air Force's participation in the operation.

On the US macroeconomic front, producer prices surprised analysts by unexpectedly falling for the third consecutive month in December.

The producer price index, which tracks changes in prices across all sectors, recorded a 0.1% decline last month, contrary to the anticipated 0.1% rebound.

The decline was primarily driven by a 0.4% drop in final demand goods, including lower food and energy prices.

As a result, the annual rate of PPI inflation stood at 1%, below the expected 1.3%.

“With the impact of lower oil prices still feeding through the index, producer prices registered their third consecutive decline in December,” said economist Matthew Martin from Oxford Economics.

“While the potential for supply disruptions from goods and materials traversing the Red Sea or Panama Canal offer upside risk to producer prices, we still forecast a period of subdued gains in the second half of 2024 as weak goods demand offsets higher services prices.

“This should help bolster the case for Fed rate cuts beginning in May of this year.”

On the continent, Germany saw a significant surge in its trade balance for November, surpassing analysts' predictions.

Exports in the country totalled €131.2bn on a calendar and seasonally adjusted basis, marking a 3.7% increase from the previous month.

The impressive performance followed a 0.4% decline in exports in the prior month, significantly outperforming expectations of a 0.3% increase.

Finally on data, consumer prices in China showed a slight improvement, albeit remaining in deflationary territory for the third consecutive month in December.

The consumer price index fell by 0.3% year-on-year, surpassing expectations of a 0.4% decline and an improvement from the 0.5% decrease recorded in November.

On the other hand, producer prices in China dropped by 2.7% annually, a slight improvement from November's 3% decline, indicating ongoing economic challenges in the world's second-largest economy.

Oil plays manage gains, Burberry slides on profit warning

On London’s equity markets, oil giants Shell and BP saw positive gains, rising by 0.71% and 0.26%, respectively, in response to an upward swing in oil prices.

Oil industry services company John Wood Group outperformed with a significant 4.2% rise, after it cited a robust order book as the driving force behind its expectations of full-year adjusted core earnings surpassing earlier projections.

UK housebuilder Vistry Group managed gains of 0.36% at the end of a turbulent session.

The company announced that it anticipated exceeding expectations in its 2023 financial performance due to strong forward sales.

In broker note action, Bunzl added 1.84% after it received an upgrade to 'equalweight' from Morgan Stanley.

On the downside, luxury fashion brand Burberry Group slid 6.02% after a significant profit warning attributed to the ongoing slowdown in luxury demand, which had affected the industry in recent months.

The company said it now expected its adjusted operating profit for the financial year ending 30 March to range between £410m and £460m - a significant deviation from the £552m to £668m range previously guided just two months ago.

Airlines also faced a challenging day, with BA and Iberia owner IAG, easyJet, and Wizz Air Holdings all experiencing declines of 2.69%, 2.49%, and 2.63%, respectively.

The declines were driven by the impact of geopolitical tensions on the aviation sector.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,624.93 0.64%
FTSE 250 (MCX) 19,197.62 0.47%
techMARK (TASX) 4,296.77 0.94%

FTSE 100 - Risers

Endeavour Mining (EDV) 1,479.00p 3.79%
JD Sports Fashion (JD.) 114.45p 3.76%
Fresnillo (FRES) 533.40p 3.05%
Antofagasta (ANTO) 1,636.00p 3.02%
Rolls-Royce Holdings (RR.) 305.00p 2.69%
Spirax-Sarco Engineering (SPX) 9,996.00p 2.63%
Rightmove (RMV) 563.00p 2.40%
Severn Trent (SVT) 2,602.00p 2.32%
B&M European Value Retail S.A. (DI) (BME) 567.20p 2.24%
BAE Systems (BA.) 1,189.50p 2.23%

FTSE 100 - Fallers

Burberry Group (BRBY) 1,295.50p -5.51%
International Consolidated Airlines Group SA (CDI) (IAG) 144.55p -2.86%
Centrica (CNA) 150.00p -1.54%
Informa (INF) 754.60p -1.44%
Ocado Group (OCDO) 652.20p -1.39%
Lloyds Banking Group (LLOY) 44.98p -0.57%
SSE (SSE) 1,795.50p -0.53%
Marks & Spencer Group (MKS) 262.00p -0.49%
IMI (IMI) 1,558.00p -0.38%
Entain (ENT) 947.80p -0.38%

FTSE 250 - Risers

Future (FUTR) 779.50p 7.00%
Hochschild Mining (HOC) 91.35p 4.16%
Foresight Group Holdings Limited NPV (FSG) 401.00p 4.13%
Moonpig Group (MOON) 162.50p 4.10%
Ashmore Group (ASHM) 223.80p 3.80%
Genuit Group (GEN) 388.00p 3.60%
Bakkavor Group (BAKK) 85.00p 3.41%
4Imprint Group (FOUR) 4,600.00p 3.37%
Bytes Technology Group (BYIT) 590.00p 2.97%
Wood Group (John) (WG.) 158.40p 2.89%

FTSE 250 - Fallers

Close Brothers Group (CBG) 658.50p -4.22%
Darktrace (DARK) 353.80p -3.69%
TUI AG Reg Shs (DI) (TUI) 554.00p -3.32%
Wizz Air Holdings (WIZZ) 2,075.00p -2.82%
W.A.G Payment Solutions (WPS) 90.40p -2.61%
Watches of Switzerland Group (WOSG) 614.00p -2.46%
Derwent London (DLN) 2,190.00p -2.23%
easyJet (EZJ) 503.00p -2.18%
Vietnam Enterprise Investments (DI) (VEIL) 551.00p -1.78%
Hargreaves Lansdown (HL.) 733.80p -1.61%