London midday: Stocks slump on Powell comments; UK GDP shows stagnation

(Sharecast News) - London stocks had extended losses by midday on Friday following hawkish comments from Fed chair Jerome Powell, and as data showed the UK economy stagnated in the third quarter. The FTSE 100 was down 1.4% at 7,353.57.

Stocks in the US slumped after Powell said in a speech that he was not confident the Fed had reached a monetary policy stance to achieve the 2% inflation target and that there was still a long way to go.

Russ Mould, investment director at AJ Bell, said: "Renewed caution came as Federal Reserve chair Jerome Powell pushed back against the narrative that had been building in the market that the rate hiking cycle was done and it was safe to begin thinking about when rates might start to be cut.

"Powell offered a reminder that inflation is still some way above 2% and the central bank would act if appropriate to keep a lid on prices. As pushbacks go this was more of a mild shove than a body slam, but it was enough to temper some of the recent exuberance among investors."

On home shores, figures from the Office for National Statistics showed GDP was unchanged in the three months to September, versus consensus expectations for a 0.1% contraction.

Activity in the services sector shrank 0.1%, while construction grew 0.1% and production was flat.

For the month of September, GDP rose 0.2% on the month following 0.1% growth in August, which was revised down from 0.2%. Economists were expecting no growth.

Darren Morgan, ONS director of economic statistics, said: "The economy is estimated to have shown no growth in the third quarter.

"Services dropped a little with falls in health, management consultancy and commercial property rentals.

"These were partially offset by growth in engineering, car sales and machinery leasing.

"In the month of September the economy grew slightly, with increases in film production, health and education.

"This growth was partially offset by falls in retail and computer programming."

Paul Dales, chief UK economist at Capital Economics, said: "The key point is that the economy is not weak enough to reduce core inflation and wage growth quickly.

"As such, we don't expect the Bank of England will be able to cut interest rates until late in 2024 rather than in mid-2024 as widely expected."

In equity markets, drinks giant Diageo tumbled after saying it expects to see a slowdown in growth in the first half due to a weaker performance in Latin America and the Caribbean.

The company had said back in September that it expected first-half organic net sales growth to pick up from the second half of last year ended 30 June.

But Latin America and the Caribbean (LAC), one of its five key regions which accounts for 11% of group net sales values, is now expected to see an organic net sales decline of more than 20% in the second half compared with last year.

Redrow slid as it warned that full-year sales and profits would likely be at the lower end of guidance to due to a subdued Autumn trading period.

The housebuilder said all of its key performance metrics have worsened year-on-year since the start of the financial year which began on 3 July, such as the value of reservations, average reservations per outlet, cancellations, selling prices and the order book.

Market Movers

FTSE 100 (UKX) 7,353.57 -1.37% FTSE 250 (MCX) 17,752.44 -1.58% techMARK (TASX) 4,048.28 -1.25%

FTSE 100 - Risers

BAE Systems (BA.) 1,108.00p 1.65% Shell (SHEL) 2,647.50p 1.24% BP (BP.) 480.00p 0.98% Relx plc (REL) 2,961.00p 0.17% Compass Group (CPG) 2,080.00p 0.00% Dechra Pharmaceuticals (DPH) 3,780.00p 0.00% London Stock Exchange Group (LSEG) 8,532.00p -0.05% Hikma Pharmaceuticals (HIK) 1,756.50p -0.06% Centrica (CNA) 151.25p -0.13% 3i Group (III) 2,018.00p -0.20%

FTSE 100 - Fallers

Diageo (DGE) 2,780.00p -14.33% Ocado Group (OCDO) 503.00p -7.71% Fresnillo (FRES) 518.80p -4.53% Burberry Group (BRBY) 1,651.00p -3.98% Anglo American (AAL) 1,994.40p -3.93% Barratt Developments (BDEV) 439.50p -3.91% Antofagasta (ANTO) 1,282.00p -3.21% Spirax-Sarco Engineering (SPX) 8,490.00p -3.08% Croda International (CRDA) 4,434.00p -3.06% WPP (WPP) 704.60p -3.03%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 94.80p 4.87% Foresight Group Holdings Limited NPV (FSG) 409.00p 2.00% UK Commercial Property Reit Limited (UKCM) 58.30p 1.22% HarbourVest Global Private Equity Limited A Shs (HVPE) 2,235.00p 0.90% North Atlantic Smaller Companies Inv Trust (NAS) 3,620.00p 0.84% Plus500 Ltd (DI) (PLUS) 1,428.00p 0.71% Mitie Group (MTO) 105.20p 0.57% Ruffer Investment Company Ltd Red PTG Pref Shares (RICA) 269.00p 0.37% Abrdn Private Equity Opportunities Trust (APEO) 443.50p 0.34% Network International Holdings (NETW) 392.80p 0.31%

FTSE 250 - Fallers

Ceres Power Holdings (CWR) 197.20p -6.10% Indivior (INDV) 1,295.00p -5.89% Redrow (RDW) 493.00p -5.19% Wizz Air Holdings (WIZZ) 1,600.00p -4.76% Aston Martin Lagonda Global Holdings (AML) 200.80p -4.56% TUI AG Reg Shs (DI) (TUI) 436.40p -4.17% TBC Bank Group (TBCG) 2,705.00p -3.91% Persimmon (PSN) 1,131.00p -3.87% IP Group (IPO) 44.65p -3.77% CAB Payments Holdings (CABP) 64.45p -3.66%