London midday: Stocks in the red as GDP data disappoints

(Sharecast News) - London stocks were off earlier lows but still in the red by midday on Tuesday amid ongoing concerns about new coronavirus cases in the US and following the release of disappointing UK GDP data.
The FTSE 100 was 0.5% weaker at 6,145.80, while sterling was down 0.3% against the dollar at 1.2523.

Worries about the pandemic continued to dent sentiment after California reimposed restrictions on indoor activities due to a surge in new cases.

CMC Markets analyst Michael Hewson said: "Despite making yet another record high in the Nasdaq yesterday US markets rolled over into the close, closing sharply lower, as concerns that the continued rise in infection cases will prompt more US states to push back their re-opening plans as California followed Texas and Arizona in shutting downs bars, restaurants and cinemas, as hospitalisations soared."

On home shores, data out earlier from the Office for National Statistics showed the economy grew 1.8% on the month in May. This was a big improvement on April's 20.3% slump but well below consensus expectations of 5.5% growth.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "GDP languished 24.5% below January's pre-Covid peak in May, as the maintenance of a strict lockdown to curb Covid-19 prevented the economy from recovering meaningfully."

There was more bad news as the Office for Budget Responsibility said the UK economy was unlikely to recover to pre-Covid levels until the end of 2022 under it central scenario, while the budget deficit will hit its highest level in peacetime.

In its downside scenario, output will recover even more slowly, returning to its pre-virus peak only in the third quarter of 2024. The upside scenario would see activity rebound relatively quickly, recovering by the first quarter of next year.

"The coronavirus outbreak and the public health measures taken to contain it have delivered one of the largest ever shocks to the UK economy and public finances," the OBR said.

It said the UK is on track to record the largest decline in annual GDP for 300 years, with output falling by more than 10% this year in all three scenarios and contracting by a quarter between February and April.

"This delivers an unprecedented peacetime rise in borrowing this year to between 13 and 21% of GDP, lifting debt above 100% of GDP in all but the upside scenario. As the economy recovers, the budget deficit falls back. But public debt remains elevated, continuing to rise in the central and downside scenarios."

In equity markets, Halma was under the cosh as it reported record annual profit and revenue underpinned by acquisitions, but warned that adjusted pre-tax profit for FY2021 will fall 5% to 10% on the year.

Online grocer Ocado fell even as it reported a rise in half-year revenue as Britons turned to home deliveries during the coronavirus lockdown. The company said revenue for the six months to May 31 increased 27.2% to £1.02bn.

AO World reversed earlier losses after saying it experienced strong demand during the Covid-19 crisis but was cautious about the outlook as it reported a smaller annual loss. The online household appliance retailer's operating loss for the year to the end of March narrowed to £3.8m from £13m as total revenue rose to £1.05bn from £902.5m.

Market Movers

FTSE 100 (UKX) 6,145.80 -0.49%
FTSE 250 (MCX) 17,087.99 -1.71%
techMARK (TASX) 3,668.02 -0.80%

FTSE 100 - Risers

BT Group (BT.A) 113.80p 2.43%
Imperial Brands (IMB) 1,437.00p 2.13%
Sainsbury (J) (SBRY) 199.35p 1.79%
Royal Dutch Shell 'A' (RDSA) 1,299.80p 1.61%
Morrison (Wm) Supermarkets (MRW) 188.15p 1.57%
Vodafone Group (VOD) 126.52p 1.44%
Royal Dutch Shell 'B' (RDSB) 1,234.80p 1.40%
BP (BP.) 300.35p 1.25%
WPP (WPP) 600.20p 1.15%
ITV (ITV) 68.20p 0.95%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 902.00p -5.94%
Halma (HLMA) 2,169.00p -5.33%
Persimmon (PSN) 2,537.00p -4.48%
Polymetal International (POLY) 1,545.50p -4.18%
Rolls-Royce Holdings (RR.) 256.60p -4.18%
InterContinental Hotels Group (IHG) 3,725.00p -4.12%
Melrose Industries (MRO) 112.80p -3.88%
JD Sports Fashion (JD.) 621.40p -3.75%
Smurfit Kappa Group (SKG) 2,384.00p -3.48%
Taylor Wimpey (TW.) 138.75p -3.44%

FTSE 250 - Risers

Royal Mail (RMG) 178.85p 4.13%
Just Group (JUST) 49.94p 3.01%
Direct Line Insurance Group (DLG) 287.90p 1.70%
Tate & Lyle (TATE) 651.40p 1.50%
Computacenter (CCC) 1,662.00p 1.28%
IP Group (IPO) 65.80p 1.23%
G4S (GFS) 131.55p 0.80%
QinetiQ Group (QQ.) 301.20p 0.80%
TBC Bank Group (TBCG) 885.00p 0.68%
Domino's Pizza Group (DOM) 300.60p 0.60%

FTSE 250 - Fallers

Avon Rubber (AVON) 3,530.00p -6.24%
Meggitt (MGGT) 299.40p -6.03%
Hammerson (HMSO) 74.44p -5.99%
Hochschild Mining (HOC) 187.00p -5.56%
Go-Ahead Group (GOG) 656.50p -5.54%
PPHE Hotel Group Ltd (PPH) 1,130.00p -5.44%
Sanne Group (SNN) 604.00p -5.18%
WH Smith (SMWH) 992.00p -5.16%
Oxford Instruments (OXIG) 1,272.00p -4.93%
Rank Group (RNK) 141.00p -4.86%