16th Jan 2025 09:01
(Alliance News) - Stock prices in London opened higher on Thursday, despite early data showing that UK GDP growth undershot expectations and that the UK's trade deficit widened.
Gross domestic product edged up 0.1% in November, driven by growth in services, after a fall of 0.1% in October. This undershot the FXStreet-cited market consensus of 0.2% growth.
"Although this was shy of expectations it still signals some resilience, with services and construction pulling their weight despite a manufacturing slump," commented Hargreaves Lansdown's Matt Britzman. "With inflation easing and sluggish economic growth, a 25bps rate cut by the Bank of England in February seems increasingly likely. UK government bond yields have felt an immediate impact, pulling back yesterday from multi-decade highs, offering some relief to risk-on investors and borrowers alike."
Separately, the Office for National Statistics said the UK trade deficit in goods and services widened by GBP3.8 billion to GBP10.8 billion in the three months to the end of November. Also, the ONS noted that November's monthly production output was at its lowest level since May 2020, despite the decline of 0.4% slowing from October's 0.6% decrease.
The FTSE 100 index opened up 46.50 points, 0.6%, at 8,347.63. The FTSE 250 was up 41.84 points, 0.2%, at 20,375.46, and the AIM All-Share was up 0.96 points, 0.1%, at 715.49.
The Cboe UK 100 was up 0.5% at 836.66, the Cboe UK 250 was up 0.3% at 17734.12, and the Cboe Small Companies was up 0.2% at 15,382.58.
Among large-caps, Whitbread lost 1.2%.
The hotel company said that while third-quarter sales rose 19% on-year to GBP80.7 million in Germany, in the UK they decreased 4% to GBP695.1 million and total sales were down 2% at GBP763 million. Food & beverage sales fell 12%.
"Premier Inn continues to shine as the group's flagship, but challenges loom with weak UK hotel prices and a sluggish German economy potentially slowing expansion plans," Britzman commented. "While resilience is evident, Whitbread will need to keep Premier Inn leading the pack to weather an uncertain market."
Taylor Wimpey was the FTSE 100's biggest loser, down 3.6%.
The housebuilder noted that 2024 UK completions totalled 9,972, down on-year from 10,356. The average UK private home price decreased to GBP356,000 from GBP370,000.
The firm said it begins 2025 with an increased order book and "an encouraging level of enquiries" but said it is too early to "gauge customer behaviour" for the year. Also, it expects "increased build cost pressure as a result of the changed economic backdrop, including as suppliers seek to factor in the impacts of the recent UK Budget".
Among small caps, Celadon Pharma rose 81%.
The cannabis-based medicine-focused pharmaceutical company announced a new supply contract in Germany, with total expected revenue of GBP26 million.
Also, Celadon said its supply deal with Valeos is now active and expected to supply the company with up to three tonnes of annual cultivation capacity.
In European equities on Thursday, the CAC 40 in Paris was up 1.4%, while the DAX 40 in Frankfurt was up 0.2%.
The pound was quoted lower at USD1.2205 early on Thursday in London, compared to USD1.2243 at the equities close on Wednesday.
The euro stood flat at USD1.0296, against USD1.0293. Against the yen, the dollar was trading lower at JPY155.98 compared to JPY156.51.
In Asia on Thursday, the Nikkei 225 index in Tokyo was up 0.3%. In China, the Shanghai Composite was up 0.3%, while the Hang Seng index in Hong Kong was up 1.2%. The S&P/ASX 200 in Sydney closed up 1.4%.
In the US on Wednesday, Wall Street ended higher, with the Dow Jones Industrial Average up 1.7%, the S&P 500 up 1.8% and the Nasdaq Composite up 2.5%.
"US markets put risk back on the table last night, powered by cooler inflation data and a strong start to earnings season," Britzman commented. "Financial heavyweights lit up the scoreboard, while falling US government bond yields signalled hopes for rate cuts are back in play. Despite the optimism, regulatory headwinds and looming geopolitical uncertainties remind investors that 2025 won't be a walk in the park."
Brent oil was quoted higher at USD81.76 a barrel early in London on Thursday from USD81.46 late Wednesday.
"In the Middle East, a ceasefire between Israel and Hamas reduces some regional supply risks, but oil's rally seems more pumped by global fundamentals than geopolitics," Britzman commented.
Gold was quoted higher at USD2,699.09 an ounce against USD2,683.65 late on Wednesday.
Still to come on Thursday's economic calendar, from the US there is retail sales and initial jobless claims; closer to home is the eurozone's trade balance release and CPI data from Ireland.
By Emma Curzon, Alliance News reporter
Comments and questions to [email protected]
Copyright 2025 Alliance News Ltd. All Rights Reserved.