London midday: Stocks dip into the red as oil prices fall
London stocks had dipped into the red by midday on Thursday as oil prices fell back and as investors digested the latest UK GDP reading.
The FTSE 100 was down 0.2% at 7,561.83, reversing earlier small gains.
Oil prices eased after reports suggested that US president Joe Biden was planning a big release of reserves designed to stem inflation in the US economy. It was understood that Biden is close to announcing the third - and possibly biggest - release of emergency oil stocks since November. The release is expected to last several months and comprise up to 1m barrels of oil per day.
The White House's schedule says Biden will speak at 1:30pm about "actions to reduce the impact of Putin's price hike on energy prices and lower gas prices at the pump for American families". Reports said Biden's move could be the biggest ever release of US reserves.
Russ Mould, investment director at AJ Bell, said it’s noteworthy that despite Biden pledging the biggest release from the reserve since the 1970s, oil remains stubbornly above $100 per barrel.
"You can understand why the US leader felt he had to do something, given the political heat he is getting for rising fuel prices, however a speculated release of one million barrels of oil per day over the coming months has to be seen in the context of total global output of around 100 million barrels per day.
"Really this is tinkering at the margins. What might put more of a brake on prices is action by OPEC at its meeting later but the extent to which it could increase production, even if it wanted to, is open to question.
"Another factor which could tip the scales is a global economic slowdown and more lockdowns in major energy consumer China.
"The other key focus remains the war in Ukraine with mounting scepticism over the destiny of the latest round of peace talks - the market may have to accept this will be a protracted conflict and adjust its assumptions accordingly."
On the home front, data released earlier by the Office for National Statistics showed the economy grew at a faster pace than initially estimated in the fourth quarter of last year.
GDP rose by 1.3% compared to the previous quarter, up from an initial estimate of 1% growth and from revised 0.9% growth in the third quarter. That left the economy just 0.1% below where it was before the pandemic.
The largest contributors to the increase were human health and social work activities, driven by increased GP visits at the start of the quarter, and a large jump in Covid testing and tracing activities, as well as the extension of the vaccination programme.
Annual GDP growth was revised a touch for both 2020 and 2021. It is now estimated to have increased by 7.4% in 2021 versus 7.5% previously, following a revised 9.3% decline in 2020, versus 9.4% previously.
Meanwhile, consumer spending growth was revised down to 0.5% quarter-on-quarter from 1.2%.
Paul Dales, chief UK economist at Capital Economics, said the upward revision to GDP growth in Q4 may not be as encouraging as it looks as a lot of it appears to be due to inventories while consumer spending was revised down.
"The latter suggests the squeeze on real incomes is starting to bite, although the fall in the saving rate is providing a cushion," he said.
In equity markets, Vodafone was knocked lower by a downgrade to ‘underperform’ at Exane, while Taylor Wimpey, Phoenix Group, Moneysupermarket and ContourGlobal were all lower as they traded without entitlement to the dividend.
Next shares were under the cosh after disappointing first-quarter results from H&M.
On the upside, Pearson was a high riser, having tumbled on Wednesday after US investment firm Apollo said it would not make a takeover offer for the educational publisher.
Halma was also in the black after an upgrade to ‘hold’ at HSBC.
Elsewhere, Brewin Dolphin rocketed to the top of the FTSE 250 after the wealth manager agreed to be bought by Royal Bank of Canada in a £1.6bn deal. Rathbone Group also racked up healthy gains.
Provident Financial rose after it reinstated its dividend as the subprime lender returned to profit after bad-debt provisions fell.
Trainline surged after it agreed to reduce the commission it receives for selling train tickets as part of a review by the rail industry.
Market Movers
FTSE 100 (UKX) 7,561.83 -0.22%
FTSE 250 (MCX) 21,288.52 0.08%
techMARK (TASX) 4,341.16 -0.74%
FTSE 100 - Risers
Intermediate Capital Group (ICP) 1,822.50p 2.91%
Pearson (PSON) 757.00p 2.41%
Halma (HLMA) 2,538.00p 1.97%
Sage Group (SGE) 711.00p 1.63%
Severn Trent (SVT) 3,083.00p 1.41%
Spirax-Sarco Engineering (SPX) 12,650.00p 1.40%
Intertek Group (ITRK) 5,350.00p 1.40%
United Utilities Group (UU.) 1,131.00p 1.39%
Relx plc (REL) 2,407.00p 1.35%
Reckitt Benckiser Group (RKT) 5,879.00p 1.34%
FTSE 100 - Fallers
Taylor Wimpey (TW.) 130.05p -3.60%
Next (NXT) 6,080.00p -3.09%
Vodafone Group (VOD) 125.56p -2.98%
Royal Mail (RMG) 335.40p -2.92%
Associated British Foods (ABF) 1,688.00p -2.46%
Phoenix Group Holdings (PHNX) 618.80p -2.43%
BT Group (BT.A) 183.00p -2.30%
BP (BP.) 374.60p -2.13%
WPP (WPP) 1,032.00p -1.99%
Melrose Industries (MRO) 126.15p -1.87%
FTSE 250 - Risers
Brewin Dolphin Holdings (BRW) 512.00p 61.01%
Trainline (TRN) 240.00p 21.09%
Rathbone Group (RAT) 1,970.00p 11.68%
Polymetal International (POLY) 324.00p 6.13%
Quilter (QLT) 144.30p 3.63%
AJ Bell (AJB) 303.60p 3.20%
Tate & Lyle (TATE) 739.20p 2.75%
Provident Financial (PFG) 325.40p 2.52%
Wizz Air Holdings (WIZZ) 2,951.00p 2.29%
Trustpilot Group (TRST) 152.50p 2.28%
FTSE 250 - Fallers
Moneysupermarket.com Group (MONY) 192.00p -3.66%
Tullow Oil (TLW) 51.64p -3.22%
Auction Technology Group (ATG) 989.00p -2.85%
Ashmore Group (ASHM) 232.80p -2.84%
Travis Perkins (TPK) 1,253.00p -2.79%
Frasers Group (FRAS) 654.00p -2.75%
Micro Focus International (MCRO) 409.80p -2.54%
Workspace Group (WKP) 680.00p -2.51%
SSP Group (SSPG) 234.70p -2.49%
Watches of Switzerland Group (WOSG) 1,166.00p -2.18%