London open: Stocks edge higher after UK GDP
Opening Market Report
07:14, 11th September 2020

(Sharecast News) - London stocks edged higher in early trade on Friday as investors digested the latest UK GDP figures, with Brexit talks due to resume.
At 0840 BST, the FTSE 100 was 0.3% firmer at 6,023.67, while the pound was up 0.4% against the dollar at 1.2853.

Data released earlier by the Office for National Statistics showed the economy continued to recover in July but remains below pre-pandemic levels.

The economy grew 6.6% in July following 8.7% growth in June and a 2.4% increase in May, coming in just below expectations for a 6.7% increase. This compares to a record 20% contraction in April in the aftermath of the imposition of full lockdown.

GDP has recovered 18.6% from the April low but is still 11.7% below its pre-Covid peak.

ONS director of economic statistics Darren Morgan said: "While it has continued steadily on the path towards recovery, the UK economy still has to make up nearly half of the GDP lost since the start of the pandemic.

"Education grew strongly as some children returned to school, while pubs, campsites and hairdressers all saw notable improvements. Car sales exceeded pre-crisis levels for the first time with showrooms having a particularly busy time.

"All areas of manufacturing, particularly distillers and car makers, saw improvements, while housebuilding also continued to recover. However, both production and construction remain well below previous levels."

Thomas Pugh, UK economist at Capital Economics, said the monthly rise in GDP, although a little slower than July, "still suggests that the record-breaking negative growth rate of GDP in Q2 will be followed by a record-breaking positive growth rate in Q3".

"However, July was probably the last of the big step ups in activity and a full recovery probably won't be achieved until early 2022, which is why we think the Bank of England will yet expand QE by a further £250bn in total."

Meanwhile, Brexit was firmly in focus as talks between both sides were set to resume despite the UK rejection of the EU's ultimatum to ditch plans to override the withdrawal agreement.

In equity markets, travel-related stocks were under the cosh again, with British Airways parent IAG, Premier Inn owner Whitbread, InterContinental Hotels and TUI all weaker after Portugal was put back on England's quarantine list.

Ashmore was a touch weaker after it proposed an unchanged final dividend of 12.10p a share as the emerging markets fund manager reported a 1% increase in pre-tax profit to £221.5m for the year to the end of June.

On the upside, housebuilder Barratt Developments was a high riser after an upgrade to 'overweight' at JPMorgan. Royal Mail was also up after an upgrade at JPM, while Essentra and Travis Perkins were boosted by upgrades at Jefferies.

Swiss iron ore company Ferrexpo racked up healthy gains after it announced a further special dividend following strong cash generation and amid solid demand. The company declared a special interim dividend of 6.6 cents a share. This follows dividends of the same amount in June and August and brings the total distributions for this year to 19.8 cents.

Rio Tinto was trading a little higher as it announced that chief executive Jean-Sébastien Jacques has resigned after the company's board yielded to shareholder pressure over the destruction of sacred 46,000-year-old rock shelters in Western Australia.

Market Movers

FTSE 100 (UKX) 6,023.67 0.34%
FTSE 250 (MCX) 17,585.19 0.06%
techMARK (TASX) 3,833.64 0.28%

FTSE 100 - Risers

Burberry Group (BRBY) 1,519.00p 1.64%
Associated British Foods (ABF) 1,959.00p 1.48%
Barratt Developments (BDEV) 518.20p 1.21%
Flutter Entertainment (FLTR) 11,645.00p 1.17%
British American Tobacco (BATS) 2,651.00p 1.16%
AstraZeneca (AZN) 8,428.00p 1.12%
Anglo American (AAL) 1,881.80p 1.03%
Sainsbury (J) (SBRY) 189.60p 0.90%
National Grid (NG.) 857.40p 0.87%
DCC (DCC) 6,460.00p 0.84%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 195.20p -2.59%
Whitbread (WTB) 2,337.00p -1.35%
Avast (AVST) 539.00p -1.10%
Lloyds Banking Group (LLOY) 26.15p -1.02%
Barclays (BARC) 103.98p -1.01%
Informa (INF) 396.80p -1.00%
InterContinental Hotels Group (IHG) 4,375.00p -1.00%
Johnson Matthey (JMAT) 2,584.00p -0.84%
M&G (MNG) 155.40p -0.83%
Smith (DS) (SMDS) 278.00p -0.82%

FTSE 250 - Risers

Ferrexpo (FXPO) 182.80p 3.92%
PPHE Hotel Group Ltd (PPH) 1,015.00p 3.57%
Royal Mail (RMG) 227.90p 3.36%
Travis Perkins (TPK) 1,143.00p 2.88%
Essentra (ESNT) 289.80p 2.26%
Dunelm Group (DNLM) 1,370.00p 2.16%
Oxford Biomedica (OXB) 850.00p 2.04%
Spirent Communications (SPT) 275.50p 1.85%
Jlen Environmental Assets Group Limited NPV (JLEN) 116.00p 1.75%
TR Property Inv Trust (TRY) 357.00p 1.71%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 151.40p -3.93%
Avon Rubber (AVON) 3,860.00p -2.89%
Virgin Money UK (VMUK) 90.18p -2.80%
Computacenter (CCC) 2,290.00p -2.55%
Hochschild Mining (HOC) 231.00p -2.37%
Aston Martin Lagonda Global Holdings (AML) 58.60p -2.25%
Calisen (CLSN) 156.70p -2.22%
Babcock International Group (BAB) 244.60p -2.20%
TUI AG Reg Shs (DI) (TUI) 349.50p -2.07%
Wood Group (John) (WG.) 224.90p -2.00%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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