London open: Stocks nudge up; UK economy unexpectedly shrinks in January

At 0820 GMT, the FTSE was up 0.1% at 8,551.30.

Derren Nathan, head of equity research at Hargreaves Lansdown, said: "The FTSE 100’s opened up a touch this morning after a rebound in Asian stocks overnight. They were buoyed by hopes that the US government would avoid a shutdown of non-essential services after Senate leader Chuck Schumer said he would vote to pass the latest funding bill.

"However, disappointing UK GDP figures may keep a lid on the size of any bounce today. There’s growing pressure for chancellor Rachel Reeves to pull a bunny out of her bonnet in this month’s Spring Statement and provide a boost to the economy."

Figures released earlier by the Office for National Statistics showed that gross domestic product contracted by 0.1% in January following 0.4% growth in December, and versus expectations for 0.1% growth.

Production output fell by 0.9% on the month in January following a 0.5% increase in December 2024. This was due mainly to a 1.1% fall in manufacturing output.

ONS director of economic statistics Liz McKeown said: "The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.

"However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more."

Paul Dales, chief UK economist at Capital Economics, said the contraction in real GDP in January highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt.

"Overall, these figures don’t do much to change our forecasts that the economy will grow by just 0.1 q/q (or perhaps 0.2% q/q) in Q1 and by only 0.7% in 2025 as a whole," he said. "With the prospect of higher taxes from April having left business sentiment on the floor and the global backdrop deteriorating, the economy is unlikely to strengthen much from here."

In equity markets, Melrose Industries was the standout performer on the FTSE 100 as Citi reiterated its ‘buy’ rating on the stock, saying it "presents a compelling investment opportunity".

Housebuilder Berkeley Group gained as it reaffirmed earnings guidance but said planned government regulatory changes were putting delivery of new homes under "significant" pressure.

Heat treatment and thermal processing services firm Bodycote tumbled as it delivered a cautious outlook as it presented its full-year results, with end markets remaining mixed after a "challenging" 2024, in which adjusted operating profits grew only 1.1% to £129m.

The company said the current run-rate profit performance is at similar levels to the second half, with challenging conditions in automotive and industrial markets combined with strong demand in aerospace and defence.

Market Movers

FTSE 100 (UKX) 8,551.30 0.10%
FTSE 250 (MCX) 19,718.10 0.15%
techMARK (TASX) 4,738.11 0.27%

FTSE 100 - Risers

Melrose Industries (MRO) 504.20p 1.61%
easyJet (EZJ) 479.50p 1.20%
Rentokil Initial (RTO) 330.30p 1.19%
International Consolidated Airlines Group SA (CDI) (IAG) 279.20p 1.12%
Glencore (GLEN) 315.70p 1.01%
Rightmove (RMV) 672.20p 0.99%
Rolls-Royce Holdings (RR.) 779.00p 0.99%
BAE Systems (BA.) 1,605.00p 0.91%
Antofagasta (ANTO) 1,823.50p 0.86%
Rio Tinto (RIO) 4,770.00p 0.85%

FTSE 100 - Fallers

Reckitt Benckiser Group (RKT) 5,130.00p -1.72%
Pershing Square Holdings Ltd NPV (PSH) 3,628.00p -1.20%
Spirax Group (SPX) 7,050.00p -0.84%
Barclays (BARC) 286.55p -0.80%
Aviva (AV.) 540.00p -0.74%
WPP (WPP) 627.40p -0.73%
BT Group (BT.A) 155.40p -0.64%
Tesco (TSCO) 369.40p -0.57%
Vodafone Group (VOD) 72.94p -0.46%
Centrica (CNA) 143.15p -0.45%

FTSE 250 - Risers

Ashmore Group (ASHM) 158.00p 5.83%
Hays (HAS) 79.75p 5.28%
NCC Group (NCC) 136.00p 5.26%
Bytes Technology Group (BYIT) 423.40p 4.80%
Moonpig Group (MOON) 206.50p 4.61%
IP Group (IPO) 42.00p 3.58%
Primary Health Properties (PHP) 97.00p 3.19%
Future (FUTR) 885.00p 2.61%
Bloomsbury Publishing (BMY) 578.00p 2.12%
Savills (SVS) 924.00p 1.99%

FTSE 250 - Fallers

Elementis (ELM) 142.60p -4.55%
RS Group (RS1) 585.50p -2.50%
Senior (SNR) 154.20p -2.41%
Ibstock (IBST) 163.00p -2.40%
Domino's Pizza Group (DOM) 285.80p -2.19%
W.A.G Payment Solutions (WPS) 58.40p -2.01%
Ithaca Energy (ITH) 130.70p -1.88%
Me Group International (MEGP) 187.00p -1.68%
BlackRock World Mining Trust (BRWM) 475.00p -1.45%
CMC Markets (CMCX) 212.50p -1.39%