London pre-open: Stocks seen up as economy returns to growth

(Sharecast News) - London stocks were set to rise at the open on Wednesday as data showed the UK economy returned to growth in January. The FTSE 100 was called to open around 10 points higher.

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. In the three months to January, however, services output showed no growth.

Production output declined by 0.2% in January and in the three-month period.

Construction output was up 1.1% in the month of January but down 0.9% in the three month period.

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."

Ruth Gregory, deputy chief UK economist at Capital Economics, said news the economy expanded by 0.2% m/m in January "suggests the UK economy may already have moved out of recession and implies there is some upside to our 2024 GDP growth forecast of 0.0%".

In corporate news, South America-focused miner Hochschild reported a 10% fall in production, offset by rising prices and the devaluation of the Argentinian peso which helped to lift adjusted core earnings.

The company said adjusted EBITDA came in at $274.4m, up 10%. Revenues fell 6% to $693.7m.

IP Group said in its annual results that, despite a 13% decline in net asset value per share to 114.8p due to adjustments in the carrying values of key investments, it maintained a strong balance sheet with £226.9m in gross cash and continued to invest £73.2m in portfolio companies.

The intellectual property investor initiated a £20m share buyback, with future cash returns to be in the form of buybacks when share price discounts to net asset value exceed 20%, and over £75m already returned to shareholders through dividends and buybacks since 2021.

Anglo American reported another increase in rough diamond sales at De Beers as prices continue to rebound after slumping in 2023, though the company warned that tough macro conditions will keep a lid on growth for a while.

De Beers saw sales of $430m in its second sales cycle of 2024, up from $374 in the first cycle and $137m in the last cycle of 2023, but down from $497m a year earlier.