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London open: Stocks rally after GDP data, ahead of US earnings
London stocks rose in early trade on Friday as the latest GDP data suggested the UK recession had ended and as investors eyed the start of US earnings season.
At 0820 BST, the FTSE 100 was up 0.9% at 7,992.06.
According to figures released earlier by the Office for National Statistics, GDP grew 0.1% in February following 0.3% growth the month before, in line with consensus expectations. January’s figure was revised up from a previous estimate of 0.2%. growth.
The figures suggested GDP did not contract in the quarter between January and March, raising hopes that a recession is over. This follows a contraction in the third and final quarters of 2023.
Liz McKeown, director of economic statistics at the ONS, said: “The economy grew slightly in February with widespread growth across manufacturing, particularly in the car sector. Services also grew a little with public transport and haulage, and telecommunications having strong months.
“Partially offsetting this there were notable falls across construction as the wet weather hampered many building projects.
“Looking across the last three months as a whole, the economy grew for the first time since last summer.”
Paul Dales, chief UK economist at Capital Economics, said the 0.1% gain in February and the revision to January all but confirms the recession ended in the fourth quarter.
“But while we expect a better economic recovery than most, we doubt it will be strong enough to prevent inflation (and interest rates) from falling much further as appears to be happening in the US,” he added.
Looking ahead to the rest of the day, earnings season was set to kick off across the pond.
Richard Hunter, head of markets at Interactive Investor, said: “The heavy lifting will now be passed to the onset of the corporate quarterly reporting season, which begins in earnest today with the release of results from the likes of Citigroup, JP Morgan and Wells Fargo.
“Quite apart from giving guidance on the current state of the nation and the consumer in particular, the banks will also update on any customer default trends amid higher lending, and also whether dealmaking amid increased M&A activity has washed through to those with an investment banking exposure.”
In UK equity markets, precious metals miner Fresnillo shot to the top of the FTSE 100 as gold prices surged.
BP gushed higher following a report that the United Arab Emirates’ state-owned oil company recently considered buying the oil giant but the deliberations did not progress beyond preliminary discussions.
Reuters cited people familiar with the matter as saying that Abu Dhabi National Oil Company (ADNOC) ultimately decided BP would not be the right fit for its strategy. Political considerations also weighed on the potential move, one of the people said.
Elsewhere, Petrofac tumbled after saying it remains in discussions with its lender over the restructuring of its debt which would result in a significant proportion of the debt being exchanged for equity in the business.
In broker note action, Taylor Wimpey was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.
“Taylor Wimpey has the wind behind its sales, and we like the cut of its jib,” RBC said. “Of the housebuilding majors it is the least distracted by management change, strategic change or potential M&A activity.
“We believe it is reading the weather well: that the weather is improving. With all hands on deck it may be the first to react to improving market conditions and the first of the large caps to meet its medium-term goals.”
The bank cut its stance on Berkeley Group to ‘underperform’ from ‘sector perform’.
JPMorgan Cazenove also had a research note out on housebuilders. The bank upgraded Barratt Developments, Persimmon, Redrow, Taylor Wimpey and Vistry, but downgraded Bellway and Berkeley Group.
It said: “Overall, despite the backdrop of a likely subdued 2024E from an operational perspective, we take a more positive stance on the sector this year, as we see scope for likely positive sentiment/newsflow from the upcoming UK election (with housing expected to be a key focus) before positioning for a recovery in 2025E, likely aided by rate cuts.”
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Fresnillo Plc | +5.27% | +30.50 | 609.00 |
| 2 |  |
Anglo American Plc | +4.03% | +85.50 | 2,209.00 |
| 3 |  |
Glencore Plc | +3.66% | +16.90 | 479.05 |
| 4 |  |
Antofagasta Plc | +3.65% | +81.00 | 2,299.00 |
| 5 |  |
Taylor Wimpey Plc | +3.61% | +4.70 | 134.95 |
| 6 |  |
Sse Plc | +3.26% | +52.50 | 1,661.00 |
| 7 |  |
Persimmon Plc | +3.08% | +39.00 | 1,304.50 |
| 8 |  |
Bp Plc | +3.08% | +16.00 | 536.00 |
| 9 |  |
Rio Tinto Plc | +2.72% | +142.00 | 5,372.00 |
| 10 |  |
Barratt Developments Plc | +2.27% | +10.30 | 463.30 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -1.46% | -5.40 | 364.70 |
| 2 |  |
Prudential Plc | -1.06% | -7.60 | 709.00 |
| 3 |  |
Mondi Plc | -0.63% | -9.00 | 1,409.00 |
| 4 |  |
Flutter Entertainment Plc | -0.55% | -85.00 | 15,280.00 |
| 5 |  |
Spirax-sarco Engineering Plc | -0.31% | -30.00 | 9,710.00 |
| 6 |  |
Rightmove Plc | -0.26% | -1.40 | 534.40 |
| 7 |  |
Intertek Group Plc | -0.25% | -12.00 | 4,838.00 |
| 8 |  |
St. James’s Place Plc | -0.19% | -0.80 | 428.40 |
| 9 |  |
Smith (ds) Plc | -0.05% | -0.20 | 412.80 |
| 10 |  |
Easyjet Plc | -0.04% | -0.20 | 550.20 |
US close: Mixed session as traders digest PPI numbers
Wall Street stocks turned a mostly positive performance on Thursday following the release of yet another key inflation report.
At the close, the Dow Jones Industrial Average was down 0.01% at 38,459.08, while the S&P 500 advanced 0.74% to 5,199.06 and the Nasdaq Composite saw out the session 1.68% weaker at 16,442.20.
The Dow closed just 2.43 points lower on Thursday, narrowly extending losses recorded in the previous session after March’s hotter-than-expected consumer price index fuelled worries that the Federal Reserve may now implement fewer rate cuts than initially thought. The yield on the benchmark 10-year Treasury note rose 18 basis points on the news, hitting its highest level since November 2023.
With the CPI in the rearview, Thursday’s primary focus was March’s producer price index, which revealed, in seasonally adjusted terms, so-called total final demand prices were up in March by 0.2% month-on-month – less than consensus estimates for a 0.3% increase. In year-on-year terms, producer prices were ahead by 2.1%, following an increase of 1.6% during the previous month.
The Department of Labor said goods prices dipped by 0.1% on the month and services’ were ahead by 0.3% with trade prices rising by 0.3%, and those for transportation and warehousing by 0.8%. Food prices rose by 0.8% versus February, but those for energy served as a partial offset, declining by 1.6%.
Elsewhere on the macro front, initial jobless claims decreased in the week ended 6 April, according to the Labor Department, dropping to 211,000 from 222,000 in the previous week, for the lowest reading in a month, and below market expectations for a print of 215,000. Last week’s decline follows an upwardly revised two-month high in the previous week and continues to outline a tight labour market, giving the Federal Reserve more room to hold interest rates higher for longer in order to combat inflation.
In the corporate space, investors looked ahead to tomorrow for the first batch of big-name bank earnings, with JPMorgan, Wells Fargo and Citigroup all set to report on Friday.
Friday newspaper round-up: Everton, AstraZeneca, Amazon
Everton has paid about £30m in interest charges to an opaque lender associated with a tax exile, corporate records suggest. The charges appear to have reached about £438,000 a week, according to the troubled Premier League club’s most recent set of accounts, a figure more than three times the reported wages of the Everton and England goalkeeper Jordan Pickford. – Guardian
Aircraft could one day take off on fuel made from human waste under plans revealed by Wizz Air and the British sustainable aviation company Firefly to build a commercial refinery in Essex. Firefly, based in Bristol, said it had developed a process to convert treated sewage into sustainable aviation fuel, or SAF. – Guardian
AstraZeneca has suffered an investor backlash over a £19m pay award for its chief executive, in a vote that will deepen concerns of an exodus of UK companies to the US. Around 35pc of investors voted to reject AstraZeneca’s remuneration report and changes to its bonus plan at the company’s AGM on Thursday. The changes increase chief executive Pascal Soriot’s total reward package to £18.7m. His remuneration was up from £16.9m in the prior year, which already made the French-born executive the highest paid boss on the FTSE 100. – Telegraph
Annual profits at the City fund management firm co-founded by Sir Jacob Rees-Mogg, the Conservative MP, more than halved last year before client withdrawals forced the business to wind itself down. Latest accounts filed by Somerset Capital Management at Companies House show that net profits at the business fell to less than £3.1 million in the 12 months to the end of March last year, from almost £6.5 million in 2022. – The Times
Shares in Amazon closed at a new record high as the stock market value of the world’s biggest online retailer edged closer to $2 trillion. At the end of trading on Wall Street, its stock price had risen $3.10, or 1.7 per cent, to $189.05, compared with its previous high of $186.57 on July 8, 2021, giving it a market capitalisation of $1.97 trillion. The rise in Amazon shares yesterday helped the Nasdaq Composite index to close at its sixth record high of the year so far with a gain of 271.84 points, or 1.7 per cent, to 16,442.20. – The Times
