London close: Stocks turn red after lacklustre GDP reading
By Josh White
Date: Friday 12 Sep 2025
(Sharecast News) - London stocks were in the red by the close on Friday, as investors weighed weak domestic growth data and rising expectations that the US Federal Reserve will cut interest rates next week.
The FTSE 100 index fell 0.15% to close at 9,283.29, while the more domestically focused FTSE 250 declined 0.32% to 21,625.40, reversing early gains.
Sterling also weakened, slipping 0.16% on the dollar to last trade at $1.3552, as it edged 0.03% lower against the euro, changing hands at €1.1564.
UK economy stalls in July, inflation expectations climb
In economic news, the UK economy stalled in July as weakness in production offset growth in services and construction, according to data from the Office for National Statistics.
Monthly GDP was flat, matching expectations after a stronger-than-forecast 0.4% rise in June and a 0.1% fall in May.
On a three-month basis, growth slowed to 0.2% from 0.3% in June.
Services output rose 0.4% and construction expanded 0.6%, while production fell 1.3%.
Patrick Munnelly at TickMill noted that "UK GDP in July remained flat at 0.0% m/m, as reported by the ONS, though the index slipped slightly from 102.9 to 102.8 due to rounding.
"Industrial production fell 0.9% month-on-month, contrary to expectations of no change, driven by a reversal of June's strong manufacturing output in certain sub-sectors.
"Meanwhile, the services sector grew 0.1% month-on-month, with only half of its sub-sectors expanding.
"Despite a flat start to the third quarter, June's strong 0.4% monthly growth provides a favorable handover, meaning modest growth in August and September could still meet the BoE's Q3 projection of 0.3% quarter-on-quarter."
Munnelly said the data was unlikely to surprise the MPC ahead of next week's meeting.
"Within services, health, computer programming and office support services all performed well, while the falls in production were driven by broad-based weakness across manufacturing industries," said Liz McKeown, director of economic statistics at the ONS.
Chancellor Rachel Reeves was facing mounting pressure as she prepared for her budget in November, with the economy growing just 0.7% in the first quarter and 0.3% in the second, alongside high public spending and persistent inflation.
Matt Swannell, chief economic adviser to the EY Item Club, warned that "the outlook contains few bright spots" and said growth would likely remain "very modest" in the coming months.
Derren Nathan at Hargreaves Lansdown added that the figures posed a "further challenge to Reeves to plug the UK's funding gap without stalling the economy in the budget."
Russ Mould, investment director at AJ Bell, said that "news the economy flatlined in July wasn't a shock to investors as most economists hadn't expected any growth.
"That's why the news didn't cause a wobble on the UK stock market, with the FTSE 250 holding firm in early trading.
"However, the GDP result will do nothing to improve business sentiment, and ongoing uncertainty could lead more companies to take a cautious approach and that doesn't bode well for UK domestic earnings - and therefore share price - growth."
The Bank of England next meets on 18 September, but with inflation still elevated, analysts expect no change to interest rates.
Separate ONS data showed the value of goods imports rose 5.4% to £51.8bn in July while exports climbed 6.6% to £30.6bn.
The total goods and services trade deficit widened by £0.4bn to £10.3bn in the three months to July.
Kathleen Brooks at XTB said the drop in production reflected "a mixture of tariff concerns and a higher tax burden for business," noting that "exports to the US remain below their pre-tariff rate" as Donald Trump's policies continue to weigh on UK trade.
Meanwhile, UK households' long-term inflation expectations climbed to their highest level since 2019, with the Bank of England's Inflation Attitudes Survey showing expectations for inflation in five years' time rising to 3.8% from 3.6% in May.
Expectations for the coming year rose to 3.6% from 3.2%.
The British Retail Consortium meanwhile warned that up to 400 large retail stores could close if the government proceeds with plans to apply a higher business tax to premises with a rateable value above £500,000.
The proposed surcharge, aimed at funding relief for smaller shops, could apply to around 4,000 large outlets including supermarkets and department stores.
"Britain's largest shops are magnets, pulling people into high streets, shopping centres and retail parks, supporting thousands of surrounding cafes, restaurants and smaller and independent shops," commented BRC chief Helen Dickinson.
Across the Atlantic, consumer sentiment in the US deteriorated in September on mounting worries over inflation and the labour market.
The University of Michigan's Consumer Sentiment Index fell to 55.4 from 58.2 in August, below forecasts.
Director Joanne Hsu said "consumers continue to note multiple vulnerabilities in the economy," while inflation expectations for the next five years rose to 3.9% from 3.5%.
She noted that trade policy "remains highly salient," with around 60% of respondents mentioning tariffs unprompted, as concerns grow that Donald Trump's tariff policies could push up prices.
Miners climb on strong copper prices, Ocado sinks as Kroger mulls pivot
On London's equity markets, SSP Group rose 2.3% after Berenberg upgraded the Upper Crust owner to 'buy' from 'hold', lifting sentiment around the travel catering group.
Mining stocks were also higher as copper prices surged past $10,000 a tonne, a level rarely breached.
Glencore climbed 1.64%, Antofagasta gained 1.36% and Anglo American added 0.75%.
Kathleen Brooks said "copper is the new gold," adding that its price is "often considered a proxy for global growth" and that the timing of Anglo American's recent deal with Teck Resources "suggests that the world is going crazy for copper, and they want a (big) slice of the pie."
Mould noted that "the broad-based rise in miners ... suggests certain investors are in a risk-on mood ahead of the US interest rate decision next week.
"The Fed is widely expected to cut rates by a quarter percentage point.
"Such a move could please the market as it makes it cheaper for companies and consumers to borrow money that can then be spent and help accelerate economic growth."
Insurers Beazley and Hiscox advanced 2.84% and 1.63% respectively, while JTC surged 15.84% after revealing it had received a preliminary takeover proposal from private equity funds managed by Warburg Pincus, following earlier rejected approaches from both Warburg Pincus and Permira Advisers.
On the downside, Ocado slumped 19.9% after key US partner Kroger signalled a possible shift away from its large automated fulfilment centres.
Kroger told analysts it would take a "hard look" at its automated facilities and highlighted the strength of its store network, which can reach 97% of customers with two-hour delivery.
Neil Wilson at Saxo Markets said Kroger "seems likely to move away from the kind of large customer fulfilment centres provided by the British company," while Morgan Stanley warned of an "increasing risk" that some Ocado sites could be closed.
Precious metals miner Fresnillo fell 1.82%, while gold miners Hochschild Mining and Endeavour Mining slipped 0.36% and 0.14% respectively, despite earlier gains on firmer gold prices.
Retailers JD Sports and Marks & Spencer also declined 2.16% and 1.37%.
Mould said the weak UK GDP data had weighed on the sector, noting that retailers "depend on the consumer feeling happy to splash the cash."
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 9,283.29 -0.15%
FTSE 250 (MCX) 21,625.40 -0.32%
techMARK (TASX) 5,457.54 -0.63%
FTSE 100 - Risers
BAE Systems (BA.) 1,981.00p 8.13%
Babcock International Group (BAB) 1,157.00p 5.18%
CRH (CDI) (CRH) 8,442.00p 3.10%
Relx plc (REL) 3,440.00p 3.09%
Beazley (BEZ) 814.50p 2.84%
Rolls-Royce Holdings (RR.) 1,130.00p 2.77%
Pershing Square Holdings Ltd NPV (PSH) 4,680.00p 2.63%
Centrica (CNA) 160.35p 2.33%
Glencore (GLEN) 303.50p 2.33%
Compass Group (CPG) 2,599.00p 2.32%
FTSE 100 - Fallers
Flutter Entertainment (DI) (FLTR) 20,870.00p -2.75%
Diageo (DGE) 1,869.00p -2.66%
Entain (ENT) 853.80p -2.49%
Ashtead Group (AHT) 5,314.00p -1.96%
Hikma Pharmaceuticals (HIK) 1,632.00p -1.92%
JD Sports Fashion (JD.) 90.52p -1.91%
Spirax Group (SPX) 6,970.00p -1.90%
InterContinental Hotels Group (IHG) 8,888.00p -1.59%
M&G (MNG) 253.60p -1.59%
SEGRO (SGRO) 610.00p -1.52%
FTSE 250 - Risers
JTC (JTC) 1,360.00p 16.44%
Trainline (TRN) 298.00p 14.62%
Avon Technologies (AVON) 2,105.00p 8.51%
Helios Towers (HTWS) 143.00p 4.38%
Chemring Group (CHG) 567.00p 4.23%
Jupiter Fund Management (JUP) 121.40p 4.12%
QinetiQ Group (QQ.) 505.00p 3.87%
BlackRock World Mining Trust (BRWM) 626.00p 3.81%
SSP Group (SSPG) 155.50p 3.74%
Carnival (CCL) 2,153.00p 3.66%
FTSE 250 - Fallers
Ocado Group (OCDO) 240.30p -21.50%
Oxford Nanopore Technologies (ONT) 165.20p -5.85%
Burberry Group (BRBY) 1,105.00p -5.76%
IP Group (IPO) 56.60p -5.51%
Chrysalis Investments Limited NPV (CHRY) 124.60p -4.45%
XPS Pensions Group (XPS) 339.00p -4.24%
Energean (ENOG) 860.00p -3.86%
SDCL Efficiency Income Trust (SEIT) 55.60p -3.30%
Playtech (PTEC) 383.50p -3.28%
W.A.G Payment Solutions (EWG) 106.00p -3.20%
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