London share prices were mixed at midday on Friday, after a report of marginal GDP growth failed to reassure currency and stock market participants about the health of the UK economy.
The FTSE 100 index was up 27.74 points, or 0.4%, at 7,759.56. The FTSE 250 was down 34.94 points, or 0.2%, at 19,231.75, and the AIM All-Share was marginally higher, up 0.36 of a point at 815.59.
The FTSE 100 outperformed London’s other indices thanks to a strong performance from insurer Beazley, which shot to the top of the blue-chip index, as well as pharmaceutical firm GSK, which celebrated a legal victory in Canada.
The Cboe UK 100 was up 0.4% at 775.70, the Cboe UK 250 was down 0.1% at 16,821.83, and the Cboe Small Companies was up 0.3% at 13,568.82.
The Office for National Statistics said UK gross domestic product grew 0.1% in the first three months of 2023, compared to the final quarter of last year.
Growth was in line with FXStreet-cited market consensus. GDP also had grown 0.1% in the fourth quarter of 2022 from the third.
Danni Hewson, head of financial analysis at AJ Bell, said the UK economy is ‘sluggish’, despite the minor first-quarter growth, commenting that for businesses and cash-strapped consumers alike such ‘listless’ forward momentum probably feels ‘a lot like no momentum at all’.
In March alone, UK GDP shrank by 0.3% on a monthly basis. It had been expected to remain flat, as it had in February. In January, the economy had expanded by 0.5%, upwardly revised from 0.4% growth.
‘Despite the fact that a contraction was avoided again, the UK growth outlook remains quite weak,’ commented Brown Brothers Harriman. ‘Indeed, the 0.3% month-on-month drop in March GDP suggests the economy is going into Q2 with a loss of momentum. And much of the BOE tightening hasn’t had full impact yet.’
Friday’s GDP reading comes a day after the Bank of England wiped away its forecast for a recession in the UK.
The central bank now expects gross domestic product to flat-line over the first two quarters of the year, having previously predicted a decline.
‘Let’s be clear,’ AJ Bell’s Danni Hewson cautioned, ‘whilst the Bank of England may believe the UK economy will now avoid the predicted recession entirely, the country is not in good health.’
The pound was quoted at $1.2538 at midday on Friday in London, higher compared to $1.2514 at the close on Thursday.
On the London Stock Exchange, Beazley was the top blue-chip performer at midday, up 4.8%.
The insurer reported gross written premiums were 12% higher at $1.37 billion in the first quarter of 2023 from $1.23 billion a year earlier. Net written premiums increased by 24% to $1.07 billion from $859 million.
Beazley Chief Executive Adrian Cox said the headline growth seen in the quarter was in line with expectations, underpinned by growth in property insurance and reinsurance, where the company is ‘taking advantage of the excellent and continuing market conditions.’
Looking forward, AJ Bell Investment Director Russ Mould noted that improved investment returns, helped by higher yields on government bonds and no change in catastrophe claims expectations, means that the firm also continues to expect a ‘healthy’ increase in profits this year.
Beazley said it remains confident in its growth guidance of mid-teens gross premium written and mid-20s net premium written for the full-year.
GSK climbed 2.1% as it welcomed a legal ruling in Canada that threw out a proposed class action made on behalf of users of a heartburn drug.
The pharmaceutical company noted that the British Columbia Supreme Court said there was little evidence that ranitidine, or zantac, leads to an increased risk of developing any type of cancer.
Diageo shares traded at the bottom of the FTSE 100, with the stock down 2.1% after Jefferies cut the brewer and distiller to ’hold’ from ’buy’.
Jefferies also lowered the Guinness beer and Smirnoff vodka maker’s price target to 3,800 pence from 4,000p. The stock is currently trading at 3,542.50p.
In the FTSE 250, Balfour Beatty was up 0.5%.
The infrastructure construction firm said that trading since the start of 2023 has been in line with expectations.
It reported that its order book fell 2.3% to £17.0 billion at the end of March from £17.4 billion at the end of December, but added it expects 2023 profit from operations from its earnings-based business to be broadly in line with 2022.
Profit from operations in 2022 was £83 million, down 14% from £97 million in 2021.
Elsewhere in London, US Solar Fund dropped 4.9% as it announced it had terminated its formal sales process.
The solar power-focused investor explained it had not yet received a formal asset sale proposal that it would consider in the best interest of its shareholders.
On AIM, FireAngel Safety Technology rose 6.9%. It announced it had been commissioned by an unnamed government agency to provide smoke and heat alarms for a large, connected alarm project for low income families in the Middle East.
The home safety product supplier said the contract is valued at about £1.5 million and will be delivered over the next six months.
In European equities on Friday, the CAC 40 index in Paris was up 0.8%, while the DAX 40 in Frankfurt was up 0.5%.
The euro stood at $1.0909, lower against $1.0917. Against the yen, the dollar was trading at JP¥134.67, higher compared to JP¥134.33.
Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.4%, the S&P 500 index up 0.4%, and the Nasdaq Composite up 0.2%.
Wall Street ended with mixed fortunes on Thursday, amid renewed nerves over US regional banks and the debt ceiling outweighed optimism that the US Federal Reserve may soon pause its rate rises.
Disney also weighed heavily on stocks, closing 8.7% lower. The media and entertainment conglomerate reported after the market closed on Wednesday that profit and revenue was in line with estimates for its second quarter, but also the loss of four million Disney+ subscribers.
Brent oil was quoted at $75.13 a barrel at midday in London on Friday, down from $75.61 late Thursday. Gold was quoted at $2,007.44 an ounce, lower against $2,019.26.
Still to come in Friday’s economic calendar, the US export and import price index will be published at 1330 BST.
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