London midday: Stocks turn lower as UK recession looms; GSK under pressure

(Sharecast News) - London stocks had dipped into the red by midday on Friday, as investors mulled the prospect of a looming recession. The FTSE 100 was down 0.3% at 7,350.98.

Stocks had kicked the session off higher, taking their cue from solid gains on Wall Street and in Asia on the back of a cooler-than-expected US inflation print and the easing of some Covid restrictions in China.

The country has decided to scrap Covid flight restrictions and cut the quarantine requirements for inbound travellers to eight from 10 days.

But uninspiring data from the Office for National Statistics weighed on the mood as it showed the economy shrank by 0.2% in the last quarter, leaving the UK on the brink of recession.

GDP fell by 0.2% in the three months to September end, compared to a rise of 0.2% in the second quarter. Still, this was ahead of expectations for a 0.5% contraction.

Production output fell by 1.5% in July-September, the fifth consecutive quarter of contraction. Manufacturing output tumbled 2.3%. In September, GDP fell by 0.6%. That compares to a fall of 0.1% in August, revised upwards from an earlier estimate for a 0.3% contraction.

The bank holiday for the state funeral of Queen Elizabeth II, when many businesses closed, weighed heavily on September's print.

Darren Morgan, director of economic statistics at the ONS, said: "With September showing a notable fall partly due to the effects of the additional bank holiday for the Queen's funeral, overall the economy shrank slightly in the third quarter.

"The quarterly fall was driven by manufacturing, which saw widespread declines across most industries.

"Services were flat overall, but consumer-facing industries fared badly, with a notable fall in retail."

ING economist James Smith said: "Not all of the latest weakness in UK GDP is explained away by September's extra bank holiday, and we're expecting further declines in output over the coming quarters.

"As the cost-of-living squeeze continues, we expect a 2% hit to GDP by next summer, though much depends on how the government's energy support evolves between now and then."

In equity markets, GSK slumped after it said the second-line application of one of its cancer treatments will be limited following a request by US regulators.

Insurer Beazley was weaker even as it reported a 22% rise in gross premiums for the first nine months of the year and said initial estimated losses from Hurricane Ian would be $120m.

On the upside, Asia-focused Prudential was the standout gainer on the China Covid news.

Miners were boosted by the news, with Anglo American, Antofagasta, Rio Tinto and Glencore all up, while luxury fashion brand Burberry - whose biggest market is China - also rallied.

Elsewhere, M&G was lifted by an initiation at 'buy' at Jefferies.

Market Movers

FTSE 100 (UKX) 7,350.98 -0.33% FTSE 250 (MCX) 19,705.19 1.69% techMARK (TASX) 4,368.91 -0.70%

FTSE 100 - Risers

Prudential (PRU) 1,013.00p 8.97% B&M European Value Retail S.A. (DI) (BME) 379.40p 6.22% Ocado Group (OCDO) 751.60p 5.38% Anglo American (AAL) 3,298.00p 5.30% Hargreaves Lansdown (HL.) 937.00p 5.12% Antofagasta (ANTO) 1,416.00p 4.77% Rolls-Royce Holdings (RR.) 89.99p 4.69% Harbour Energy (HBR) 384.70p 4.51% M&G (MNG) 193.60p 4.48% Rio Tinto (RIO) 5,375.00p 4.41%

FTSE 100 - Fallers

Relx plc (REL) 2,232.00p -6.10% BAE Systems (BA.) 734.80p -5.43% Bunzl (BNZL) 2,888.00p -5.06% Compass Group (CPG) 1,788.00p -4.79% Experian (EXPN) 2,832.00p -4.26% GSK (GSK) 1,350.60p -4.09% Rentokil Initial (RTO) 542.00p -3.70% Imperial Brands (IMB) 2,020.00p -3.49% Diageo (DGE) 3,602.50p -3.22% British American Tobacco (BATS) 3,213.50p -3.11%

FTSE 250 - Risers

Auction Technology Group (ATG) 965.00p 10.03% Molten Ventures (GROW) 455.40p 9.63% Ashmore Group (ASHM) 248.40p 8.47% ASOS (ASC) 753.00p 8.35% Wizz Air Holdings (WIZZ) 2,393.00p 7.89% Currys (CURY) 84.00p 7.55% Liontrust Asset Management (LIO) 1,164.00p 6.79% Moonpig Group (MOON) 173.60p 6.57% Jupiter Fund Management (JUP) 130.20p 6.55% Shaftesbury (SHB) 423.00p 6.07%

FTSE 250 - Fallers

Serco Group (SRP) 162.70p -4.12% QinetiQ Group (QQ.) 340.40p -3.51% Babcock International Group (BAB) 283.00p -3.35% Tate & Lyle (TATE) 717.20p -2.87% ICG Enterprise Trust (ICGT) 1,030.00p -2.83% Baltic Classifieds Group (BCG) 147.80p -2.64% Drax Group (DRX) 546.50p -2.41% Beazley (BEZ) 648.00p -1.52% BBGI Global Infrastructure S.A. NPV (DI) (BBGI) 165.60p -1.43% Man Group (EMG) 222.70p -1.29%