The UK economy contracted by an estimated 0.1% in the second quarter, the Office for National Statistics said today.
This decline was due to a 0.6% decline in June. This is a performance that reflects the downsizing of Covid-19 testing and vaccine programs and the disruption to activities caused by the anniversary celebrations.
However, Citi economists had forecast a 1.2% decline in June and a 0.2% contraction in the second quarter.
Read more about Q2 GDP
FTSE 100 Live Friday
Q2 GDP fell 0.1% after falling 0.6% in June
US Progress Boosts Flutter Entertainment Shares
FTSE 100 rises, but retail stocks under pressure
FTSE 100 rises, Kingfisher drops after downgrade
10:19 , Graham Evans
Retail stocks came under further pressure today after Citibank lowered its recommendations for stocks such as Dunelm and B&Q owner Kingfisher.
A weaker outlook for DIY spending means UBS has rated Kingfisher as a ‘sell’, with a new price target of 203p, down 21% from last night’s price.
The bank also dropped its ‘buy’ stance on home goods retailer Dunelm, lowering its price estimate to 850p from 1,761p. UBS said:
DFS Furniture suffered another casualty after being downgraded to ‘Sold’, while Howden Joinery maintained its ‘Buy’ status as a ‘relatively safe bet in a tough environment’.
After the downgrade, Kingfisher shares fell 5.3p to 250.5p and Howden shares fell 11.8p to 673.4p. Dunelm fell 20p to 821p in the FTSE 250 Index and DFS fell 5p to 136.2p, compared to UBS’s new price target of 100p.
Retailers’ attention was turned to BP and Shell after the FTSE 100 index rose 43.67 points to 7509.58 and Brent crude climbed above $100 a barrel.
Industry prices surged yesterday when the International Energy Agency raised its demand forecast for this year amid the switch from gas to oil for power generation.
The FTSE 250 index rose 25.19 points to 20,270.62, while travel group TUI’s share price rose 5.3p to 153.8p.
GDP fell 0.1% amid recession fears
09:06 , Graham Evans
UK production fell by 0.1% in the second quarter. This includes he fell 0.6% in June amid temporary factors such as the end of the jubilee and his Covid testing program.
ING economist James Smith expects monthly GDP to recover by about 0.7% in July and about 0.5% for the entire third quarter.
he said: But by the fourth quarter, the signs of a recession could become clearer.
“We will have to wait and see what kind of support the new prime minister will provide, but it is very likely that GDP will fall at least in the fourth quarter,” he said.
FTSE 100 increase, GSK 2% increase
08:55 , Graham Evans
GSK shares rose 2% or 25.8p to 1425.8p, down 10% yesterday on concerns over potential US lawsuits related to heartburn drug Zantac.
The company said today that numerous extensive reviews since 2019 have failed to identify cancer risks and that it intends to vigorously defend all claims.
GSK’s former consumer healthcare unit Haleon, which also sold heavily yesterday, fell 1p to 264.8p.
The FTSE 100 index rose 24.86 points to 7490.77, pushing BP and Shell shares up 1% as Brent crude returned to above $100 a barrel.
The FTSE 250 index fell 27.26 points to 20,218.17, led by 888 Holdings, which fell 8% or 12.2p on the results.
Flutter shares soar on first half results
08:33 , Graham Evans
Shares of Flutter Entertainment rose 7%, rising from 658p to 10,040p. The gaming company’s half-year results show continued momentum in the United States, the market leader in online sports betting by FanDuel.
Underlying income of £476m in the first half was down 20% but in line with expectations as Paddy Power owners continue to invest in the US.
CEO Peter Jackson said:
“We expanded our recreational customer base to over one million people in the first half, and increased the percentage of customers using safer gambling tools by more than a third.”
Stocks listed on the FTSE 100 have fallen by a third over the past year, but their prices have risen by more than 40% over the past three years.
Richard Hunter, Head of Markets at Interactive Investor, said:
US market solidifies gains, FTSE 100 stabilizes
07:56 , Graham Evans
The improving outlook for inflation and interest rates continues to benefit US markets after major indices consolidated recent gains in overnight trading.
The tech-heavy Nasdaq is now more than 20% higher than its recent lows as sentiment improves on hopes of a slowing pace of Federal Reserve interest rate hikes.
This optimism is fueled by July’s weaker-than-expected inflation rate and yesterday’s Producer Price Index reading.
The headline index fell from 11.3% in June to 9.8% in July.
The mood in European markets has become more tense amid concerns about winter energy supplies and natural gas futures prices returning to their highest level since early March.
That left a lackluster session for the region’s major indices yesterday, with the FTSE 100 index down 0.6% amid heavy sell-offs in GSK and Haleon stocks.
CMC Markets expects the FTSE 100 to open unchanged at 7466.