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London open: Stocks rally after GDP data, ahead of US earnings

(Sharecast News) - 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."

Market Movers

FTSE 100 (UKX) 7,992.06 0.86% FTSE 250 (MCX) 19,975.30 0.95% techMARK (TASX) 4,484.07 0.58%

FTSE 100 - Risers

Fresnillo (FRES) 619.50p 7.09% Taylor Wimpey (TW.) 134.50p 3.26% Persimmon (PSN) 1,301.50p 2.84% BP (BP.) 533.30p 2.56% Anglo American (AAL) 2,173.00p 2.33% Barratt Developments (BDEV) 462.90p 2.19% Antofagasta (ANTO) 2,261.00p 1.94% Glencore (GLEN) 470.15p 1.73% Scottish Mortgage Inv Trust (SMT) 866.80p 1.71% Sainsbury (J) (SBRY) 264.20p 1.69%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,703.50p -0.18% Haleon (HLN) 323.00p -0.06% Prudential (PRU) 716.20p -0.06% RELX FINANCE BV 3.375% GTD NTS 20/03/33 (BW73) 99.72p 0.00% JD Sports Fashion (JD.) 122.55p 0.00% Smith (DS) (SMDS) 413.40p 0.10% GSK (GSK) 1,631.00p 0.12% British American Tobacco (BATS) 2,306.00p 0.13% Bunzl (BNZL) 3,000.00p 0.13% Unilever (ULVR) 3,819.00p 0.16%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 265.80p 4.73% Trainline (TRN) 373.40p 3.95% AJ Bell (AJB) 306.00p 3.90% Hochschild Mining (HOC) 148.20p 3.64% Chemring Group (CHG) 365.00p 3.40% Coats Group (COA) 82.20p 3.14% Endeavour Mining (EDV) 1,812.00p 3.07% Edinburgh Worldwide Inv Trust (EWI) 149.60p 3.03% SThree (STEM) 447.00p 3.00% Morgan Sindall Group (MGNS) 2,330.00p 2.87%

FTSE 250 - Fallers

Supermarket Income Reit (SUPR) 72.30p -2.56% IWG (IWG) 181.20p -2.05% Watches of Switzerland Group (WOSG) 368.60p -1.18% Marshalls (MSLH) 275.00p -0.90% Pacific Horizon Inv Trust (PHI) 601.00p -0.83% Trustpilot Group (TRST) 187.20p -0.64% Bellway (BWY) 2,542.00p -0.47% Indivior (INDV) 1,625.00p -0.43% Genuit Group (GEN) 438.00p -0.34% Templeton Emerging Markets Inv Trust (TEM) 155.40p -0.13%

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Important information: This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice. When you are thinking about investing in shares, it’s generally a good idea to consider holding them alongside other investments in a diversified portfolio of assets. Past performance is not a reliable indicator of future returns.

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