FTSE 100 dips
Smaller caps gain
Pound falls 0.4% against US dollar to $1.2580
Pound falls 0.3% against euro to 1.1722 euros
FTSE 100 ended softer on Thursday following sharp falls by Sage Group and Unilever, while mid- and small-cap stocks gained.
The blue chip share index dipped 0.04% to 7,161.49.
Shares in accountancy software specialist Sage (LON:SGE) tumbled 5.5% to 599p following poor sales in its US payments business which it may now sell.
Consumer goods giant Unilever's (LON:ULVR) stock plunged 4.7% to 3191p on currency headwinds.
Drinks-maker Diageo (LON:DGE) was the day's top riser, up 3.6% to 2218p, after reporting half-year sales at the owner of Guinness, Smirnoff and Pimm's, benefitted from favourable foreign exchange rates and was also bolstered by an improved performance in the US spirits market.
The FTSE 250 midcaps edged 0.05% higher to 18,142 and led by IMI (LON:IMI) up 4.5% to 1177p after broker Credit Suisse upgraded IMI to 'outperform' from 'neutral' and downgraded Rotork to 'neutral' from 'outperform', lifting the former's price target to 1,220p from 1,020p and cutting the latter's to 250p from 230p.
The FTSE AIM 100 Index closed up 0.07% at 4169 and the FTSE AIM All-Share Index advanced by 0.05% to 875.
Across the London bourse 30% of stocks gained and 34% lost.
1330 GMT - FTSE 100 holds gains as GDP stats show robust UK growth
FTSE 100 up 14 points at 7,178
UK Q4 GDP up 0.6%, better than forecasts
Royal Bank of Scotland up after fresh £3.1bn US probe provision
Unilever, Whitbread weak after numbers; Diageo higher
The FTSE 100 continued to hold this morning’s slight gains, up 11 points or 0.16% trading at 7,177 at around 13:30.
It comes after GDP stats for the fourth quarter revealed strong consumer spending in the build-up to Christmas helped the UK economy to shrug off any post-Brexit concerns and grow faster-than-expected last year.
Initial figures from the Office for National Statistics show the economy grew by 0.6% in the fourth quarter of 2016 – the same rate as in the previous two quarters. That number was ahead of the 0.5% growth many economists had been forecasting.
As the City pondered on the latest GDP figures and what they say about the Brexit impact the news wheel keeps turning - notably car manufacturers this afternoon warned that they saw the prospect of post-Brexit trade tariffs as a “red line” issue.
Elsewhere, there was a rekindling of the executive pay debate as tobacco company Imperial Brands Plc (LON:IMB) threw out plans to reward boss Alison Cooper with a payrise, which would’ve seen her receive £8.5mln for 2017.
The remuneration package needed to get shareholder approval on February 1, but after some shareholder consultation that part of the vote has been pulled.
10.30 am … UK growth continues
The Footsie shook off its earlier torpor and pushed up to session highs mid morning as the pound fell back against the US dollar after the UK economy kept up its surprisingly robust growth in the final three months of 2016.
Around 10.30am, the FTSE 100 index was up about 14 points at 7,178, just easing back from the day’s peak of 7,184 hit following the UK data.
But on currency markets, sterling lost its earlier gains versus the US dollar, turning flat at US$1,2634, although the pound hit a three-week high against the euro at €1.1808 after the data again wrong-footed expectations that June’s Brexit vote would quickly weigh on growth.
UK gross domestic product was up 0.6% in the fourth quarter to December, slightly beating expectations for 0.5%, matching the revised growth seen in the third quarter of 2016, and that achieved in the second quarter .
Overall for 2016 GDP growth edged back to 2.0%, which was down from 2.2% in 2015 and an 11-year peak of 3.1% in 2014.
Ben Brettell, senior economist at Hargreaves Lansdown said: “Initial GDP estimates should always be taken with a pinch of salt, as they are based on less than half of the data which will ultimately be available, and are therefore subject to revision in the coming months.
“Nevertheless it’s difficult to interpret today’s figures as anything other than good news for the UK economy, which is now 8.7% larger than its pre-crisis peak in 2008 and continues to rank amongst the fastest growing major economies.”
He added: “Growth was once again driven by the dominant services sector, which grew 0.8%, with particularly strong contributions from consumer focused areas like retail and travel.
“Meanwhile construction and industrial production made negligible contributions to the overall growth rate. This highlights the crucial role of consumer spending in keeping the UK economy afloat.“
The London stock market remained fairly subdued, however, as investors chewed over a big batch of mixed corporate news.
Consumer products giant Unilever PLC (LON:ULVR) and Costa Coffee to Premier Inn hotels group Whitbread plc (LON:WTB) were the two biggest blue chip fallers, both down over 4% as their latest updates disappointed.
But drinks giant Diageo plc (LON:DGE) was a strong FTSE 100 performer, up 4.6% as strong whisky sales gave the firm a boost.
And taxpayer-owned lender Royal Bank of Scotland Group PLC (LON:RBS) topped the blue chip leader board, ahead 4.7% as news of a further £3.1bn provision in relation to the ongoing US residential mortgage-backed securities probe proved no worse than feared.
8.15am ... Footsie edges higher
London’s FTSE 100 was slightly higher in Thursday’s early deals, despite Whitbread plc (LON:WTB) and Unilever Plc (LON:ULVR) weighing on the benchmark after investor updates.
The blue-chip benchmark was up about 9 points, 0.14%, changing a hands at 7,174.
Unilever revealed fourth quarter sales below expectations, sending its shares down more than 4%.
Costa Coffee remains the hot spot for Whitbread, with the coffee shop chain growing like-for-like sales by 4.3%, nonetheless, the group’s restaurant and hotels business continued to lag, managing just 0.8% like-for-like sales growth.
Whitbread was the biggest loser in the FTSE 100 after opening trades, down nearly 6%.
Subscription TV and broadband bundler Sky Plc (LON:SKY) was unscathed after releasing results showing a 9% fall in operating profits, dragged down by the big hike in Premier League football costs.
Trading at £10.04 per share, Sky was actually up slightly.
Diageo plc (LON:DGE) was trading positively, up 4.4%, after first half sales were reported 14.5% at £6.4bn.
Elsewhere, Royal Bank of Scotland Group PLC (LON:RBS) has confirmed it will take further £3.1bn (US$3.8bn) provision in relation to various investigations and litigation matters regarding its issuance and underwriting of US residential mortgage-backed securities (RMBS).
The taxpayer-owned bank said this charge, to be taken in its fourth-quarter results, takes the total aggregate of such provisions to £6.7bn (US$8.3bn).
RBS said it continues to cooperate with the US Department of Justice (DoJ) in its civil and criminal investigations of RMBS matters, and RBS considers it appropriate to take this provision now in relation to those investigations as well as other RMBS litigation matters.
7.00am ... FTSE 100 expected to kick off positively, Q4 GDP number awaited ...
London’s FTSE 100 is expected to kick off Thursday positively, following global equity indices which all lit in green.
Wall Street marked another uptick on Wednesday’s close. The Dow Jones gained 155 points, 0.78%, to end the session at 20,068, meanwhile, the S&P 500 gained 0.8% to 2,298 and the Nasdaq climbed 1% to 5,656.
In Asia, Japan’s Nikkei added 345 points, 1.8%, trading at 19,402 while Hong Kong’s Hang Send gained 1.3% to change hands at 23,354. The Shanghai Composite was also slightly higher, at 3,154.
Here in the UK, attentions will be on GDP figures for the fourth quarter of 2016 and no doubt there will be debate about what the number – whatever it is – says about the economy’s response to Brexit.
“The market is looking for a 0.5% increase in growth last quarter, which is 0.1% less than the Q3 GDP reading. If this were a correct assumption, then it would suggest that the UK economy actually performed better in the 6-months after the Brexit vote, than in the two quarters before it,” said Kathleen Brooks, analyst at City Index.
Thursday’s corporate diary is busy. The spotlight will likely be on Sky Plc (LON:SKY).
BT Group shocked investors earlier this week – albeit with specific circumstances – so many will be waiting on tenterhooks to hear whether its TV and broadband bundling rival is faring better when it releases its interim results.
Unilever Plc (LON:ULVR) and Diageo plc (LON:DGE) are also scheduled for interim results.
According to Whitman Howard, Unilever is forecast to report a 1.8% fall in revenue to US$52.3bn meanwhile it highlighted that consensus predicts 3.4% net sales growth.
Elsewhere, Costa Coffee owner Whitbread plc (LON:WTB) is due to post a trading update.
Accountancy and support services group Sage Group Plc (LON:SGE) and bingo operator Rank Group Plc (LON:RNK) are also in the diary.
There’ll also be plenty of commentary from the natural resources sector we’re expecting statements from Lonmin Plc (LON:LMI), Kaz Minerals Plc (LON:KAZ) and Anglo American Plc (LON:AAL).
Overall, there’s a degree of positivity going into Thursday’s trading.
IG Markets sees the FTSE 100 starting the day on the front, calling the blue chip benchmark some 14 points higher at 7,184 to 7,188 a little over an hour before the open.
City headlines
· RBS braced for multi-billion-pound settlement for loan-misselling scandal - The Guardian
· Southern Rail could be nationalised in wake of strikes - Daily Mail
· Cheapest places to do your shopping revealed - and this time it's not Aldi or Lidl - Mirror
· British Steel to make profit in first year after Tata sale - Financial Times
· UK car output reaches 17-year high on export growth - BBC News
Currencies / commodities
· Gold down 0.58% at US$1,193 per ounce
· Oil (Brent) up 0.18% at US$55.54 per barrel
· £ / $: 1.26438