London close: Stocks higher as UK growth misses forecasts
By Josh White
Date: Thursday 16 Jan 2025
(Sharecast News) - London equities ended Thursday in positive territory, with investors buoyed by weaker-than-expected UK growth data that bolstered expectations of a potential interest rate cut by the Bank of England next month.
The FTSE 100 index rose 1.09% to close at 8,391.90 points, while the FTSE 250 gained 0.95% to finish at 20,527.70 points.
In currency markets, sterling was last up up 0.07% on the dollar to trade at $1.2251, while it slipped 0.07% against the euro, changing hands at €1.1888.
"The FTSE 100 continues to enjoy gains, having rallied some 4% from its late-December low," said IG chief market analyst Chris Beauchamp.
"European markets have enjoyed a solid day overall, partly benefiting from yesterday's exuberant performance on Wall Street in the wake of the CPI figures.
"One notable underperformer on the day is JD Sports, which continues to suffer from its gloomy update earlier in the week - the recovery on Tuesday and Wednesday was only a brief respite, and the selling has resumed on disappointment with the lack of clear plan to revive the group's fortunes."
Beauchamp added that US indices seemed "content" to hold on to their post-CPI gains as investors awaited testimony from the latest Trump nominee to face senators.
"Mr Bessent's boss has certainly not shied away from making his feelings known on some of his favourite topics, but a more conciliatory tone from the likely new Treasury secretary could smooth the path higher for Wall Street, bolstered as it is by strong earnings and indications that inflation remains contained."
UK economy grows less than expected in latest GDP reading
In data, the UK economy showed modest growth in November, according to fresh figures from the Office for National Statistics.
Gross domestic product expanded by 0.1%, marking a return to growth after consecutive 0.1% contractions in September and October.
That was short of market expectations for 0.2% growth.
The services sector led the recovery with a 0.1% increase, offsetting declines in production, which fell 0.4%, and construction, which grew by 0.4%.
"The economy continues to be broadly flat, having grown slightly in November following two small falls in the previous months," said Liz McKeown, director of economic statistics at the ONS.
"Services grew a little, with wholesaling, pubs and restaurants and IT companies all doing well, partially offset by falls in accountancy and business rental and leasing.
"Construction also grew led by new commercial developments, while production continued to decline in November with further falls across a range of manufacturing industries and oil and gas extraction."
Meanwhile, the UK housing market ended 2024 on a strong note, with house prices rising nationwide, according to the Royal Institution of Chartered Surveyors.
December's house price balance climbed to 28, the highest reading since September 2022, as all regions saw gains.
The strongest growth was recorded in Northern Ireland and Scotland.
Although new buyer inquiries softened, sales volumes improved, and new instructions surged for the sixth consecutive month, driven by anticipated stamp duty changes.
"The latest survey points to a further improvement in sentiment in the housing market, despite concerns about the impact of rising bond yields on borrowing costs," commented Simon Rubinsohn, chief economist at RICS.
"Most significantly, the signals from the survey around expectations over the next 12 months also remain solidly positive for now.
"However, the resilience of the uplift in market mood could be tested if the mortgage rates do begin to climb in a material way over the coming months."
On the continent, the eurozone trade surplus nearly doubled in November, reaching €16.4bn, according to data from Eurostat.
The increase from October's €8.6bn was largely due to gains in the surplus for chemicals and other manufactured goods.
However, both exports and imports declined year-on-year, by 1.6% and 1%, respectively, reflecting subdued global trade activity.
Across the Atlantic, US economic indicators presented a mixed picture.
Initial jobless claims rose by 14,000 to 217,000 for the week ended 11 January, exceeding expectations for 210,000.
Despite that, continuing claims fell unexpectedly to 1.85 million, suggesting some resilience in the labour market.
Retail sales stateside meanwhile showed slower-than-expected growth in December, rising 0.4% to $729.2bn, compared to forecasts for 0.6%.
However, upward revisions to November's data and robust control group sales, which increased by 0.7%, led economists to raise fourth-quarter growth projections.
Rightmove up on rate cut hopes, Safestore slides
On London's equity markets, property marketing platform Rightmove surged 4.31%, boosted by expectations of a Bank of England rate cut and the strong housing market data from RICS.
Trustpilot Group soared 15.66% after announcing that its full-year adjusted EBITDA would surpass consensus expectations.
Luxury-focused stocks also advanced, with Burberry up 4.05% and Watches of Switzerland gaining 8.1%, following a better-than-expected 10% rise in third-quarter sales by Cartier owner Richemont.
Chilean miner Antofagasta climbed 2.42%, reiterating its 2025 outlook despite narrowly missing fourth-quarter copper production forecasts.
Meanwhile, Deliveroo and Bakkavor Group added 6.57% and 4.2%, respectively, after positive trading updates.
On the downside, housebuilder Taylor Wimpey fell 3.35%, despite affirming its profit outlook, as it flagged concerns over higher build costs in 2025.
Educational publisher Pearson dipped 1.27%, even as it reported a 10% year-on-year increase in adjusted operating profit, reflecting investor caution around its margins.
Primark owner Associated British Foods lost 0.78% following a downgrade to 'sell' at Citi.
Homeware retailer Dunelm dropped 5.97%, despite reaffirming its profit expectations, as it described the trading environment as "challenging".
Premier Inn owner Whitbread declined 2.85%, with full-year guidance unchanged, as UK accommodation sales rose modestly over the holiday period.
Safestore Holdings plummeted 10.23% after reporting a 4.8% drop in underlying EBITDA and an 11.7% decline in adjusted earnings per share.
Inflationary pressures and the costs of new developments weighed on the self-storage provider, despite relatively stable revenues.
Reporting by Josh White for Sharecast.com.
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