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London open: Stocks gain after better-than-expected GDP
London stocks rose in early trade on Friday after a better-than-expected UK GDP reading, as investors eyed the release of key US bank earnings.
At 0825 GMT, the FTSE 100 was up 0.4% at 7,824.44.
Data out earlier from the Office for National Statistics showed that the economy unexpectedly grew in November.
Monthly gross domestic product nudged 0.1% higher in November, following growth of 0.5% in October. Analysts had been expecting a 0.2% decline. In the three months to November, however, GDP fell 0.3%, primarily due to the extra bank holiday in September for the late Queen’s state funeral.
The main driver of November’s growth was the services sector, which grew 0.2% following an increase of 0.7% in October, which the ONS revised upwards from its earlier estimate for 0.6%. The largest contributions came from administrative and support services activities as well as information and communication.
The FIFA football World Cup, which kicked off on 20 November, also helped, the ONS noted. Output in consumer-facing services growing by 0.4%, with the largest contribution coming from food and beverage services activities.
Production output decreased by 0.2%, following a fall of 0.1% in October, which was revised down from no change, dragged lower by manufacturing, which slid 0.5%. The construction sector was flat following growth of 0.4% a month previously.
Ruth Gregory, senior UK economist at Capital Economics, said: “Even if the economy does a bit better than expected in Q4, it is at best stagnating.
“And it is too soon to conclude the economy will be able to get through this period of high interest rates and high inflation largely unscathed. We still think a recession is on its way in the first half of 2023.”
Later in the day, market participants will eye earnings from US banks Citigroup, Bank of America and JPMorgan, who will be kicking off the earnings season on Wall Street.
In UK equity markets, BA and Iberia owner IAG and budget airline Wizz Air flew higher. Wizz was boosted by an upgrade to ‘outperform’ at Davy.
Taylor Wimpey was little changed after the housebuilder said full-year operating profit was set to be in line with market views, but cautioned that sales remain “significantly” below the third quarter of last year amid rising mortgage rates and ongoing market uncertainty.
Elsewhere, gambling firm 888 Holdings was in the red as it announced the departure of its chief financial officer and reported a 3% fall in group revenues for 2022.
Bulmers and Magners owner C&C Group tumbled as it downgraded its full-year profit expectations, citing cost-of-living pressures on consumers.
Top 10 FTSE 100 Risers
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Carnival Plc | +3.30% | +24.00 | 751.00 |
| 2 |  |
Marks And Spencer Group Plc | +2.82% | +4.10 | 149.40 |
| 3 |  |
Itv Plc | +2.58% | +2.00 | 79.60 |
| 4 |  |
Rolls-royce Holdings Plc | +2.46% | +2.56 | 106.56 |
| 5 |  |
Hargreaves Lansdown Plc | +2.44% | +22.20 | 932.20 |
| 6 |  |
International Consolidated Airlines Group S.a. | +2.13% | +3.26 | 156.12 |
| 7 |  |
Easyjet Plc | +2.01% | +8.40 | 426.60 |
| 8 |  |
Glencore Plc | +1.99% | +10.80 | 554.50 |
| 9 |  |
Antofagasta Plc | +1.79% | +31.50 | 1,794.00 |
| 10 |  |
Tui Ag | +1.75% | +2.95 | 171.20 |
Top 10 FTSE 100 Fallers
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| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Flutter Entertainment Plc | -1.72% | -215.00 | 12,305.00 |
| 2 |  |
Pearson Plc | -1.47% | -13.80 | 923.80 |
| 3 |  |
Coca-cola Hbc Ag | -1.19% | -23.00 | 1,903.50 |
| 4 |  |
British American Tobacco Plc | -1.12% | -35.50 | 3,137.00 |
| 5 |  |
Direct Line Insurance Group Plc | -1.01% | -1.85 | 180.95 |
| 6 |  |
Fresnillo Plc | -0.89% | -8.60 | 959.40 |
| 7 |  |
Mondi Plc | -0.53% | -8.00 | 1,499.00 |
| 8 |  |
Imperial Brands Plc | -0.49% | -10.00 | 2,046.00 |
| 9 |  |
National Grid Plc | -0.29% | -3.00 | 1,033.00 |
| 10 |  |
Barratt Developments Plc | -0.27% | -1.20 | 450.00 |
US close: Stocks rise as consumer inflation cools in December
Wall Street trading finished in positive territory on Thursday, as investors digested last month’s all-important consumer price index.
At the close, the Dow Jones Industrial Average was up 0.64% at 34,189.97, as the S&P 500 added 0.34% to 3,983.17 and the Nasdaq Composite was 0.64% firmer at 11,001.10.
The Dow closed 216.96 points higher on Thursday, extending the gains it recorded in Wednesday’s session.
“While the job picture remains strong, the Fed will be pleased to see that the inflation outlook is getting better too,” said IG chief market analyst Chris Beauchamp.
“Steady declines in the rate of price increases might not be too much comfort for consumers, but they are music to the ears of stock investors.
“For the dollar, however, it sets the scene for further declines, continuing the trend from the end of last year.”
December’s CPI print was in focus, with the data revealing that the cost of living in the US had slipped a tad more than expected last month.
According to the Department of Labor, the annual rate of headline consumer prices fell from 7.1% for November to 6.5% in December, beating consensus estimates for a print of 6.6%.
At the core level, which strips out the volatile food and energy components, CPI was up by 5.7% year-on-year, versus 6.0% in the month before and in line with economists’ forecasts.
Investors would be using the report to assess the outlook for the Federal Reserve’s rate-hiking campaign, with declining inflation likely to lead the central bank to halt its rate-rising campaign in the spring.
Elsewhere on the macro front, Americans filed unemployment claims at a decelerated clip in the seven days ended 7 January, hitting their lowest level in more than three months.
According to the Labor Department, initial jobless claims fell by 1,000 to 205,000, well and truly short of the 215,000 figures expected on the Street, adding to recent evidence of a tight labour market.
In equities, floundering retailer Bed Bath & Beyond rocketed 50.14%, extending the meme stock’s gains after it recorded its biggest single-day rise ever on Wednesday.
Walt Disney was ahead 3.61% after it announced Nike executive chairman Mark Parker would become its new chairman.
American Airlines Group ascended 9.71% after saying it expected profits to rise further in the fourth quarter.
The other legacy carriers were in the green as well, with Delta Air Lines up 3.72% and United Airlines 7.52% firmer.
Friday newspaper round-up: Royal Mail, rail strikes, Tim Cook
Royal Mail has been hit by a ransomware attack by a criminal group, which has threatened to publish the stolen information online. The postal service has received a ransom note purporting to be from LockBit, a hacker group widely thought to have close links to Russia. Royal Mail revealed that it had been hit by a “cyber incident” on Wednesday, and said it was unable to send parcels or letters abroad. The company asked customers to refrain from submitting new items for international delivery, although domestic services and imports were unaffected. – Guardian
Union leaders have agreed to work jointly with train operating companies on a revised pay offer after a meeting to resolve the long-running dispute over remuneration, jobs and conditions. Representatives from the RMT and TSSA unions met on Thursday with the Rail Delivery Group (RDG), representing train operating companies, in an effort to break the deadlock after months of disruption to the network from 24-hour strikes. – Guardian
Tim Cook, chief executive of Apple, is to have his pay package cut by more than 40 per cent to $49 million this year, at his own request. In a US stock market filing last night the tech company said that Cook, 62, will have a “target compensation of $49 million in 2023, a decline of around 40 per cent compared to what he earned in 2022”. The Apple chief’s latest pay was based on “balanced shareholder feedback, Apple’s exceptional performance and a recommendation from Mr Cook,” the iPhone maker said in the filing. – The Times
The British Army is to use 3D metal printed parts to repair armoured vehicles for the first time in a move which could extend the life of much of the force’s equipment. The pieces, made using a layering process by adding small amounts of steel to build a part, were fitted to periscopes on Titan armoured bridge launchers and Trojan minesweepers. – Telegraph
