London open: Stocks edge up after UK GDP data, ahead of Fed

(Sharecast News) - London stocks edged up in early trade on Wednesday as weak UK GDP data raised expectations of a rate cut by the Bank of England, and as investors eyed the latest policy announcement from the US Federal Reserve. At 0820 GMT, the FTSE 100 was up 0.2% at 7,554.02, while sterling was down 0.3% against the dollar at 1.2530 after figures from the Office for National Statistics showed that the economy unexpectedly shrank in October, with all three sectors contracting.

The economy shrank by 0.3% following 0.2% growth in September and versus expectations for a flat performance. Over the last quarter, GDP was unchanged.

The data showed that services output fell by 0.2% in October, driven by a decline in information and communication, and was the main contributor to the fall in GDP growth. The sector had grown 0.2% in September.

Meanwhile, production output was down 0.8%, driven by widespread declines in manufacturing, after showing no growth in September. Activity in the construction sector declined 0.5% in October following 0.4% growth the month before.

ONS director of economic statistics, Darren Morgan, said: "Our initial estimates suggest that GDP growth was flat across the last three months.

"Increases in services, led by engineering, film production and education - which recovered from the impact of summer strikes - were offset by falls in both manufacturing and housebuilding.

"October, however, saw contractions across all three main sectors. Services were the biggest driver of the fall with drops in IT, legal firms and film production - which fell back after a couple of strong months.

"These were also compounded by widespread falls in manufacturing and construction, which fell partly due to the poor weather."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "The UK is still mired deep in stagnation territory and a fast rebound looks unlikely, particularly given that interest rates are set to be kept on hold tomorrow, prolonging the pain for borrowers.

"However, it does increase the likelihood that the Bank of England might cut rates earlier than forecast, although it's still not likely until the second half of next year, given that wage increases, although slowing, are still strong."

Still to come, the US producer price index for November is due at 1330 GMT, while the Fed's final policy announcement of 2023 is at 1900 GMT.

In equity markets, BAE Systems was in the black after it won a contract worth up to $8.8bn with the US Army to continue as the operating contractor of the Holston Army Ammunition Plant (HSAAP) with a base period of 10 years.

Entain shot higher as it said that chief executive officer Jette Nygaard-Andersen has resigned from her position with immediate effect. It has appointed Stella David, a non-executive director, as interim CEO until a permanent replacement is selected.

B&M European Value Retail tumbled after SSA investments sold 27.8m shares in the discount retailer in a placing. The shares were priced at 582.5p each, raising aggregate gross sale proceeds of £162.1m.

Market Movers

FTSE 100 (UKX) 7,554.02 0.15% FTSE 250 (MCX) 18,713.20 0.27% techMARK (TASX) 4,156.99 0.44%

FTSE 100 - Risers

Rentokil Initial (RTO) 421.40p 2.13% Rolls-Royce Holdings (RR.) 310.10p 1.77% Flutter Entertainment (CDI) (FLTR) 13,320.00p 1.68% Relx plc (REL) 3,199.00p 1.27% Hargreaves Lansdown (HL.) 722.40p 1.15% BAE Systems (BA.) 1,068.50p 1.14% CRH (CDI) (CRH) 5,258.00p 1.12% IMI (IMI) 1,649.00p 1.10% Melrose Industries (MRO) 569.00p 1.03% Marks & Spencer Group (MKS) 265.60p 0.99%

FTSE 100 - Fallers

Weir Group (WEIR) 1,847.50p -3.07% Anglo American (AAL) 1,667.20p -1.70% WPP (WPP) 726.80p -1.38% Vodafone Group (VOD) 66.44p -1.00% Centrica (CNA) 143.30p -0.76% Glencore (GLEN) 433.00p -0.76% Shell (SHEL) 2,486.50p -0.50% Burberry Group (BRBY) 1,505.50p -0.50% Barclays (BARC) 141.00p -0.48% Endeavour Mining (EDV) 1,677.00p -0.47%

FTSE 250 - Risers

Trainline (TRN) 290.80p 4.76% Oxford Instruments (OXIG) 2,280.00p 4.35% Mitie Group (MTO) 103.60p 3.39% Savills (SVS) 888.50p 3.31% Volution Group (FAN) 410.00p 2.96% Dunelm Group (DNLM) 1,092.00p 2.73% IntegraFin Holding (IHP) 267.20p 2.53% Morgan Advanced Materials (MGAM) 264.50p 2.52% Domino's Pizza Group (DOM) 392.00p 2.40% Ibstock (IBST) 140.90p 2.40%

FTSE 250 - Fallers

NCC Group (NCC) 118.00p -3.59% SThree (STEM) 406.50p -2.52% RHI Magnesita N.V. (DI) (RHIM) 3,124.00p -2.13% Ceres Power Holdings (CWR) 163.40p -2.04% Mobico Group (MCG) 65.00p -1.81% Ferrexpo (FXPO) 72.65p -1.69% Jupiter Fund Management (JUP) 80.00p -1.66% Greggs (GRG) 2,450.00p -1.53% Energean (ENOG) 971.00p -1.42% Aston Martin Lagonda Global Holdings (AML) 226.00p -1.31%