London close: Stocks turn red after GDP disappointment

(Sharecast News) - London stocks had slipped into the red by the close on Thursday, after an uninspiring batch of UK economic data, as stocks across the pond started their session weak as well. The FTSE 100 ended the session down 0.37% at 7,469.28, and the FTSE 250 was off 0.54% at 18,762.07.

Sterling was also below the waterline, last trading down 0.35% on the dollar at $1.2040, while it weakened 0.18% against the euro to change hands at €1.1371.

"The bears are back in charge today, as UK GDP data provided yet another warning that we may already be in a recession," said IG senior market analyst Joshua Mahony.

"Notably, we have seen US indices push lower despite an upward revision to the US third quarter growth rate.

"This likely reflects the growing feeling of concern that the Federal Reserve will continue pushing rates upwards in the absence of any major economic distress signal."

Mahony said that for those not in the know, the outperformance of the FTSE 100 would signal "relative strength" for 'UK plc'.

"However, despite the FTSE 100 being the only major western index to have avoided significant losses in 2022, the UK has suffered the worst third quarter growth of any G7 nation."

Indeed, in economic news the UK economy contracted more than first estimated in the three months through September as household incomes fell, according to the Office for National Statistics.

GDP shrank 0.3% in the third quarter, versus an initial estimate of a 0.2% contraction.

The figures showed that real household incomes fell by 0.5% during the quarter - the fourth consecutive quarter of negative growth.

According to the ONS, the revised data also showed that the economy grew 0.6% in the first quarter and 0.1% in the second, down from previous estimates of 0.7% and 0.2% growth, respectively.

The revisions reflect bigger falls in manufacturing and production than previously estimated.

It was suggested that this might reflect changes in business and consumer behaviour in response to higher energy prices after the regulator's energy price cap rose in April.

The ONS said business investment declined 2.5% in quarterly terms in Q3, compared with an initial estimate of a 0.5% fall.

"Our revised figures show the economy performed slightly less well over the last year than we previously estimated, with manufacturing and electricity generation notably weaker," said ONS director of economic statistics Darren Morgan.

"Household incomes continued to fall in real terms, albeit at a slower rate than in the previous two quarters, while - taking account of inflation - household spending fell for the first time since the final Covid-19 lockdown in the spring of 2021."

Elsewhere, rail fares were confirmed to be rising by 5.9% next year, making for the biggest increase in a decade.

Usually, rail fares are pegged to July's retail price inflation index, but with the index hitting 12.3%, the government intervened and abandoned the link with RPI.

Still, the near-6% hike - the largest since 2012's 6.2% increase - would make for another blow to commuters as Britons struggle with the cost-of-living crisis, as well as oft-woeful train services.

The cap would be 6.4 percentage points below July's RPI, and in line with average earnings growth for that month.

"This is the biggest ever government intervention in rail fares - I'm capping the rise well below inflation to help reduce the impact on passengers," said transport secretary Mark Harper.

"It has been a difficult year and the impact of inflation is being felt across the UK economy; we do not want to add to the problem.

"This is a fair balance between the passengers who use our trains and the taxpayers who help pay for them."

On London's equity markets, corporate news continued to thin out as market participants started winding down for the Christmas break.

Electronics maker DiscoverIE Group was down 0.55% after it announced the acquisition of US-based Magnasphere Corporation for $22m (£19.1m).

Magnasphere makes magnetic sensors and switches for industrial electronic applications.

DiscoverIE said the acquisition was expected to be immediately accretive to group underlying earnings and underlying operating margin.

Elsewhere, real estate investment trust LondonMetric was knocked 1.78% lower by a downgrade to 'neutral' at Citi.

Abrdn lost 2.67% on news that its chief financial officer Stephanie Bruce was planning to step down from the role.

United Utilities Group slumped 2.73%, along with online supermarket Ocado Group which lost 3.44%.

Property marketing platform Rightmove was 1.9% lower, while oil giant Shell reversed earlier gains to close down 0.08%.

Online fast-fashion retailer Asos slid 3.21% after appointing a senior Google executive to its board, in a bid to boost corporate governance.

Marie Gulin-Merle was named as a non-executive director in an announcement earlier.

Currently Google's vice-president of advertising marketing, based in New York, she previously held various executive positions including chief marketing officer at Calvin Klein, chief digital officer of luxury brands conglomerate PVH, and group chief marketing officer of L'Oreal USA.

On the upside, GSK spinoff Haleon was up 1%, with travel caterer Compass Group adding 0.7%.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk and Frank Prenesti.

Market Movers

FTSE 100 (UKX) 7,469.28 -0.37% FTSE 250 (MCX) 18,762.07 -0.54% techMARK (TASX) 4,380.24 -0.26%

FTSE 100 - Risers

Haleon (HLN) 323.90p 1.00% Pearson (PSON) 945.60p 0.77% BT Group (BT.A) 114.35p 0.75% Compass Group (CPG) 1,934.00p 0.70% Beazley (BEZ) 677.00p 0.67% Prudential (PRU) 1,099.50p 0.64% AstraZeneca (AZN) 11,306.00p 0.55% London Stock Exchange Group (LSEG) 7,188.00p 0.48% Convatec Group (CTEC) 232.20p 0.35% Imperial Brands (IMB) 2,090.00p 0.34%

FTSE 100 - Fallers

Ocado Group (OCDO) 629.20p -3.44% United Utilities Group (UU.) 990.20p -2.73% Abrdn (ABDN) 185.95p -2.67% Halma (HLMA) 1,994.50p -2.61% Weir Group (WEIR) 1,665.00p -2.46% Pershing Square Holdings Ltd NPV (PSH) 2,845.00p -2.23% Scottish Mortgage Inv Trust (SMT) 717.00p -2.21% Schroders (SDR) 434.10p -1.96% St James's Place (STJ) 1,087.00p -1.94% Spirax-Sarco Engineering (SPX) 10,545.00p -1.91%

FTSE 250 - Risers

Volution Group (FAN) 376.00p 7.43% Clarkson (CKN) 3,115.00p 2.47% Mitie Group (MTO) 77.90p 2.37% Lancashire Holdings Limited (LRE) 641.50p 2.31% Hiscox Limited (DI) (HSX) 1,103.50p 1.94% Apax Global Alpha Limited (APAX) 189.60p 1.94% Coats Group (COA) 72.80p 1.82% Marshalls (MSLH) 269.40p 1.81% Drax Group (DRX) 686.50p 1.63% Vesuvius (VSVS) 396.20p 1.43%

FTSE 250 - Fallers

Carnival (CCL) 575.20p -5.86% Darktrace (DARK) 259.60p -4.35% Aston Martin Lagonda Global Holdings (AML) 150.75p -3.89% Molten Ventures (GROW) 331.20p -3.78% PureTech Health (PRTC) 266.50p -3.44% ASOS (ASC) 497.00p -3.21% Baltic Classifieds Group (BCG) 136.00p -3.13% Britvic (BVIC) 784.50p -3.09% Kainos Group (KNOS) 1,519.00p -3.06% Petershill Partners (PHLL) 165.20p -2.82%