Stock prices in London were higher at midday on Wednesday, with the FTSE 100 outperforming its European peers after news that the UK has overtaken several G7 countries on economic growth forecasts.
The Organisation for Economic Co-operation & Development has placed the UK joint second in its economic growth forecasts for the rest of 2024.
The prediction of 1.1% growth for the whole of this year puts the UK alongside Canada and France but behind the US.
However, its prediction of 2.7% inflation for this year means the UK is still the country in the G7 with the fastest-rising prices.
Calling the growth forecast ‘a small ray of sunshine through the dark clouds’, AJ Bell’s Russ Mould said: ‘However, the prediction of 1.1% growth for 2024 is hardly indicative of a country powering ahead.
‘Labour’s plethora of speeches this week imply it could be a two-stage process to getting the economy moving.
‘First, it needs to lay the foundations for growth by reducing what it says is the GDP22 billion black hole it inherited. Only then can we expect to see increased investment that should hopefully accelerate the economy.’
However, both sides of industry largely welcomed the UK prime minister’s conference speech, with union leaders saying that workers ‘desperately’ needed change.
TUC General Secretary Paul Nowak said unions ‘stand ready to work with him and his government to urgently repair and rebuild this country’, while CBI Chief Executive Rain Newton-Smith said: ‘The ’shared struggle’ to put the country back on the path to prosperity serves as a rallying call for a partnership between business and government that harnesses the innovation, investment, and optimism of industry to deliver lasting change.’
The FTSE 100 index was up 19.07 points, 0.2%, at 8,301.83. The FTSE 250 was up 49.73 points, 0.2%, at 20,819.85, and the AIM All-Share was up 0.43 points, 0.1%, at 743.23.
Rightmove was among the FTSE 100 laggers, losing 1.0%.
REA Group said it was ‘disappointed’ after property website Rightmove said it had rejected a third ‘unsolicited’ offer, worth £6.1 billion.
‘REA looks to be running out of patience with Rightmove after it rejected a third takeover proposal, banging the drum even louder that it’s bad form not to properly engage in a conversation,’ Mould warned. ‘This sets the tone for REA taking a hostile approach, bypassing the board and negotiating directly with shareholders.
‘Rightmove’s biggest investors are asset management firms and they will all have a price at which they’d be happy to let their shares go.’
On the FTSE 250, IG Group edged up 0.4%.
The contracts-for-difference trading platform provider started the £75 million second tranche of £150 million share buyback programme begun in July.
Among smaller companies, Directa Plus plummeted 25%.
It said for first half of 2024 pretax loss widened to £2.5 million from £1.9 million. Revenue fell to €3.4 million from €4.6 million.
The graphene product manufacturer warned that full-year revenue will be ‘materially below market expectations’ as it is experiencing ‘shorter term headwinds’.
The Cboe UK 100 was up 0.3% at 830.628, the Cboe UK 250 was up 0.3% at 18,339.10, and the Cboe Small Companies was up 0.5% at 25,169.382.
In European equities the CAC 40 in Paris was down 0.3%, while the DAX 40 in Frankfurt was down 0.5%.
Over in Spain, producer prices declined by 1.3% in August from a year before, slowing from a fall of 1.6% in July and 3.2% in June. It was the mildest fall since March 2023.
Notably, the fall in energy prices moderated to 6.0% on-year in August from 7.1% in July and nearly 12% in June.
The pound was quoted at $1.3375 at midday in London, down compared to $1.3378 at the equities close on Tuesday. The euro stood at $1.1187, up against $1.1147. Against the yen, the dollar was trading at JP¥144.20, up compared to JP¥143.67.
Stocks in New York were called lower. The Dow Jones Industrial Average was called marginally lower, the S&P 500 index down 0.1%, and the Nasdaq Composite down 0.2%.
XTB’s Hani Abuagla said that ‘weak consumer confidence data has sparked worries about the health of the US economy’.
However: ‘US GDP data on Thursday is expected to show strong growth, which may support the dollar and push yields higher.
‘Additionally, Fed Chair Powell’s speech and the Core PCE price index on Friday will be closely watched for any hints about the pace of future rate cuts, with inflation figures potentially shaping upcoming monetary policy decisions.’
Brent oil was quoted at $74.69 a barrel at midday in London, down from $74.85.
‘Prices surged after China announced significant economic stimulus, including interest rate cuts and government funding,’ said CFI’s George Khoury. ‘However, concerns lingered that more fiscal support would be needed to boost confidence in the Chinese economy. This uncertainty raised doubts about sustained demand growth, weighing on crude prices.’
Gold was quoted at $2,656.55 an ounce, up against $2,646.07.
Still to come on Wednesday’s economic calendar, from the US there is data on new home sales, building permits and crude oil.
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