London midday: Stocks steady as UK economy returns to growth

(Sharecast News) - London stocks had given up small opening gains by midday on Wednesday, having surged a day earlier, as data showed the UK economy returned to growth in January. The FTSE 100 was steady at 7,749.49, having closed up 1% on Tuesday.

Figures released earlier by the Office for National Statistics showed that gross domestic product rose 0.2% on the month in January, in line with expectations, following a 0.1% decline in December.

In the final three months of 2023, GDP fell 0.3%, having contracted by 0.1% in the previous three months, dipping the economy into a technical recession.

Services output grew by 0.2% in January and was the largest contributor to the rise in GDP, the ONS said. Production output declined by 0.2% in January, while construction output was up 1.1%.

The data showed that in the three months to January, GDP fell by 0.1% compared with the three months to October 2023. Services output showed no growth during the period, while production output fell by 0.2% and construction output also fell, by 0.9%.

ONS statistician Liz McKeown said: "The economy picked up in January with strong growth in retail and wholesaling. Construction also performed well with housebuilders having a good month, having been subdued for much of the last year.

"These were partially offset by falls in TV and film production, lawyers and the often-erratic pharmaceutical industry.

"Over the last three months as a whole, the economy contracted slightly."

Russ Mould, investment director at AJ Bell, said: "While the figure is tiny, the fact it is growing at all is a positive. Investors want the UK's recession status cast into the rear-view mirror so they can focus on how potential looser monetary policy could provide relief to consumers and businesses, and in turn feed into greater economic activity.

"Sadly, that could take time to play out."

In equity markets, heavily-weighted miners were among the best performers on the FTSE 100, with Antofagasta and Glencore both firmly in the black.

Flutter Entertainment was boosted by an upgrade to 'overweight' from 'neutral' at JPMorgan Cazenove.

Infrastructure group Balfour Beatty jumped as it lifted its dividend and announced a £100m share buyback.

On the downside, South America-focused miner Hochschild lost its shine red as it reported a 10% fall in production, offset by rising prices and the devaluation of the Argentinian peso which helped to lift adjusted core earnings.

Ferrexpo slumped after the miner said late on Tuesday that it needed more time to finalise its full-year results due to a legal claim against its unit in Ukraine.

Direct Line lost ground after saying it had received and rejected a second takeover approach from Belgian rival Ageas as it continued to undervalue the group.

On 28 February, the London-listed insurer said it had rejected a £3.1bn offer from Ageas. This comprised 100p in cash and one new Ageas share for every 25.24 Direct Line shares, and implied a value of 233p per share.

The new "highly conditional, non-binding indicative" proposal from Ageas is of 120p a share in cash and one new Ageas share for every 28.41 Direct Line shares. The latest offer has an implied value of 237p a share.

Elsewhere, InterContinental Hotels was knocked lower by a downgrade to 'hold' from 'buy' at Jefferies.

Market Movers

FTSE 100 (UKX) 7,749.49 0.02% FTSE 250 (MCX) 19,578.02 0.07% techMARK (TASX) 4,523.10 -0.27%

FTSE 100 - Risers

Antofagasta (ANTO) 1,862.00p 2.42% Glencore (GLEN) 408.55p 2.15% Flutter Entertainment (DI) (FLTR) 17,580.00p 2.12% United Utilities Group (UU.) 1,056.50p 1.49% CRH (CDI) (CRH) 6,590.00p 1.29% Aviva (AV.) 477.10p 1.06% Reckitt Benckiser Group (RKT) 5,256.00p 1.00% Whitbread (WTB) 3,332.00p 0.91% Compass Group (CPG) 2,196.00p 0.87% Severn Trent (SVT) 2,573.00p 0.86%

FTSE 100 - Fallers

Fresnillo (FRES) 450.40p -2.99% Vodafone Group (VOD) 68.14p -1.67% Standard Chartered (STAN) 659.00p -1.61% Rio Tinto (RIO) 4,841.00p -1.49% Endeavour Mining (EDV) 1,432.00p -1.45% St James's Place (STJ) 441.20p -1.43% Rightmove (RMV) 569.00p -1.39% RS Group (RS1) 721.00p -1.34% InterContinental Hotels Group (IHG) 8,296.00p -1.31% Weir Group (WEIR) 1,909.00p -1.22%

FTSE 250 - Risers

Balfour Beatty (BBY) 370.40p 9.01% W.A.G Payment Solutions (WPS) 80.80p 7.73% Moonpig Group (MOON) 180.20p 5.38% Jupiter Fund Management (JUP) 91.50p 3.39% Carnival (CCL) 1,166.00p 3.37% PZ Cussons (PZC) 91.80p 3.15% Domino's Pizza Group (DOM) 365.00p 2.82% North Atlantic Smaller Companies Inv Trust (NAS) 3,720.00p 2.76% Bakkavor Group (BAKK) 102.50p 2.50% Man Group (EMG) 255.90p 2.48%

FTSE 250 - Fallers

Hochschild Mining (HOC) 103.00p -6.70% Ferrexpo (FXPO) 52.10p -5.27% Direct Line Insurance Group (DLG) 218.10p -3.41% Supermarket Income Reit (SUPR) 74.20p -3.01% Wizz Air Holdings (WIZZ) 2,214.00p -2.98% Genuit Group (GEN) 400.00p -2.56% Centamin (DI) (CEY) 103.80p -2.35% IP Group (IPO) 50.40p -2.33% Tritax Eurobox (GBP) (EBOX) 54.70p -2.32% Dunelm Group (DNLM) 1,137.00p -1.73%