Portfolio

London close: Stocks mixed as US GDP growth tops forecasts

By Josh White

Date: Wednesday 29 Nov 2023

London close: Stocks mixed as US GDP growth tops forecasts

(Sharecast News) - London markets closed with a mixed performance on Wednesday, influenced by a combination of UK data releases and robust economic growth in the US.

The FTSE 100 experienced a modest decline of 0.43%, settling at 7,423.46 points, while the FTSE 250 saw a slight uptick of 0.44%, closing at 18,467.58 points.

On the currency front, sterling was stable against the dollar, trading at $1.2694, while it strengthened 0.11% on the euro to change hands at €1.1560.

"Once more it is the FTSE 100 that has been left behind by its peers. A mixture of stocks, but containing some heavyweight names like HSBC, have taken the index lower," said IG chief market analyst Chris Beauchamp.

"A rallying pound won't help matters, but the lack of any continued rebound this year speaks to continued disillusion among global investors regarding the prospects for the UK economy."

US growth tops forecasts, UK GDP set for sluggishness

In economic news, the US economy exceeded initial estimates for third-quarter growth according to fresh data from the US Commerce Department.

GDP expanded by 5.2% in the three months ending in September, surpassing the initial projection of 4.9%.

However, consumer spending showed a slight downturn, rising by 3.6% from July to September, compared to a previous estimate of 4%.

On home shores, the UK economy was expected to experience sluggish growth in a forecast by the Organisation for Economic Co-operation and Development (OECD).

The UK's GDP growth was projected to rise from 0.5% in the current year to 0.7% in 2024 and 1.2% in 2025, placing it on par with Italy but behind the US, where GDP was expected to grow by 1.5% in 2024 and 1.7% in 2025.

That positioned the UK as the second-lowest performer among G7 nations, with only Germany having a lower projection.

"Maintaining and strengthening current fiscal efforts is essential against the challenging backdrop of high borrowing and debt, and as higher debt interest payments have eroded fiscal headroom," the OECD said.

"Reforming the costly triple lock uprating of state pensions would help."

According to the Confederation of British Industry's latest survey, sentiment declined in the UK service sector in November.

Sentiment across business and professional service providers fell at the sharpest rate since February, with a balance of -14, compared to 3 in the preceding three months.

Within consumer services, sentiment dropped to -6 after remaining relatively stable for two consecutive quarters.

"Our latest survey highlights yet another difficult period for the service sector, with volumes and profitability falling," said the CBI's economic surveys and data manager, Charlotte Dendy.

"While cost and price growth eased last quarter, firms will be bracing for stronger growth across both in the months ahead, putting additional pressure on the sector."

On the housing front, despite rising borrowing costs, mortgage approvals in the UK increased last month, as reported in the Bank of England's money and credit report.

Gross mortgage lending dropped to £16.2bn from £18.1bn in September, but net mortgage approvals for house purchases rose to 47,400 from 43,700 the previous month, surpassing expectations.

"Growth in the money supply remained subdued in October, primarily due to the ongoing dormancy of the housing market," commented Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

"Net mortgage lending likely will remain close to zero over the coming months, given the relatively modest fall in mortgage rates so far and the meagre pick-up in mortgage approvals in response."

Meanwhile, inflation in the food sector was raising concerns, with the Competition and Markets Authority accusing food companies of inflating prices beyond their cost increases.

While surging food inflation has primarily been attributed to rising input costs, several categories, including milk, baked beans, pet food, and baby formula, have seen around three-quarters of branded suppliers increasing their unit profitability, contributing to higher food price inflation.

On the continent, eurozone economic sentiment inched up slightly in November, with the European Commission's economic sentiment indicator (ESI) rising to 93.8 from 93.5 in October.

Consumer confidence improved to -16.9 from -17.9, while the services confidence gauge reached 4.9, up from 4.6 in the previous month.

However, the manufacturing index dipped slightly to -9.5 from -9.2 in October.

Finally on data, German inflation eased to its lowest level in more than two years in November, with the consumer price index standing at 3.2% year-on-year, down from October's rate of 3.8% and below consensus expectations of 3.5%.

That marked the lowest inflation rate since June 2021, when the CPI was 2.4%.

Halfords tumbles, Ocado jumps in mixed day for equities

On London's equity markets, Standard Chartered declined 3.02%, and HSBC Holdings slipped 2.28%.

Aviva experienced a decrease of 2.03% after receiving a downgrade from 'buy' to 'hold' from Deutsche Bank.

Pennon Group slipped 2.21% after the company reported a nearly 60% decrease in half-year underlying pre-tax profit.

Halfords Group tumbled 17.8% after it narrowed its guidance range for annual profit, citing a softening demand in its big-ticket discretionary categories.

Its updated forecast for the 2024 financial year underlying pre-tax profit now stood between £48m and £53m, down from the previous guidance of £48m to £58m.

On the upside, Ocado Group jumped 6% after chairman Rick Haythornthwaite purchased 9,500 shares in the company at 561p per share, amounting to around £53,000.

Precious metals miners Fresnillo and Endeavour Mining also performed well, with gains of 5.72% and 1.72%, respectively.

Their positive performance was aligned with an increase in gold prices.

Spirent Communications rose 5.88% after it signed a significant $15m agreement with a financial services organisation to automate its laboratory and testing capabilities.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,423.46 -0.43%
FTSE 250 (MCX) 18,467.58 0.44%
techMARK (TASX) 4,077.43 -0.18%

FTSE 100 - Risers

Fresnillo (FRES) 591.00p 5.72%
JD Sports Fashion (JD.) 157.30p 5.71%
Ocado Group (OCDO) 593.60p 4.69%
Rightmove (RMV) 546.20p 3.53%
Smurfit Kappa Group (CDI) (SKG) 2,872.00p 2.94%
M&G (MNG) 209.90p 2.49%
Lloyds Banking Group (LLOY) 43.45p 2.36%
B&M European Value Retail S.A. (DI) (BME) 576.00p 2.02%
Endeavour Mining (EDV) 1,834.00p 2.00%
Rolls-Royce Holdings (RR.) 263.40p 1.97%

FTSE 100 - Fallers

Entain (ENT) 800.20p -4.10%
Prudential (PRU) 854.20p -3.52%
Standard Chartered (STAN) 640.40p -3.29%
Anglo American (AAL) 2,138.50p -2.97%
Compass Group (CPG) 2,022.00p -2.37%
Aviva (AV.) 415.60p -2.12%
Whitbread (WTB) 3,110.00p -2.11%
HSBC Holdings (HSBA) 594.80p -2.04%
Rentokil Initial (RTO) 433.80p -2.01%
RS Group (RS1) 744.80p -1.85%

FTSE 250 - Risers

NCC Group (NCC) 120.20p 6.37%
Spirent Communications (SPT) 115.20p 5.88%
Pets at Home Group (PETS) 309.60p 5.38%
Marshalls (MSLH) 250.00p 5.04%
easyJet (EZJ) 441.70p 4.87%
Indivior (INDV) 1,298.00p 4.85%
Energean (ENOG) 1,036.00p 4.44%
Darktrace (DARK) 354.40p 3.72%
Man Group (EMG) 214.10p 3.43%
Jupiter Fund Management (JUP) 83.60p 3.27%

FTSE 250 - Fallers

Digital 9 Infrastructure NPV (DGI9) 34.05p -13.36%
QinetiQ Group (QQ.) 306.00p -4.26%
Currys (CURY) 44.62p -3.46%
Lancashire Holdings Limited (LRE) 627.50p -3.16%
Helios Towers (HTWS) 73.90p -3.15%
CAB Payments Holdings (CABP) 59.30p -2.79%
Diversified Energy Company (DEC) 68.10p -2.71%
Discoverie Group (DSCV) 624.00p -2.50%
Hipgnosis Songs Fund Limited NPV (SONG) 66.60p -2.35%
North Atlantic Smaller Companies Inv Trust (NAS) 3,810.00p -2.31%

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