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(Alliance News) - Stocks in London got off to a slow start on Monday following a disappointing update from the UK economy.
The UK economy's growth lagged behind expectations in February, data from the Office for National Statistics showed, increasing the possibility the country is heading into a recession.
GDP grew by 0.1% month-on-month in February, slowing from 0.8% growth in January, and coming in behind market consensus - according to FXStreet - for 0.3% growth.
The Office for National Statistics did note, however, that the UK economy is now 1.5% above its pre-coronavirus level in February 2020.
"The UK economy is already showing signs of fresh fragility in its latest health check, which is far from surprising given that in February the world veered from one crisis to another," Susannah Streeter, markets analyst at Hargreaves Lansdown, said.
"Despite worries about consumer and company resilience this snapshot is unlikely to push the Bank of England off its path of rate hikes this year. Attempting to tame increasingly wild inflation is still set to be the priority. However, this reading does indicate the UK economy is showing more signs of fragility than the US."
The FTSE 100 index was down 18.54 points, or 0.2%, at 7,651.02 early Monday. The mid-cap FTSE 250 index was up just 14.35 points at 21,188.11, while the AIM All-Share index was up just 0.39 of a point at 1,056.28.
The Cboe UK 100 index was down 0.2% at 761.53. The Cboe 250 was up 0.3% at 18,638.45, and the Cboe Small Companies down 0.2% at 15,498.48.
The pound was quoted at USD1.3020 early Monday, unchanged from the London equities close on Friday, and regaining its composure after sliding to USD1.2990 following the GDP release.
In London, high-street lenders were among the day's early risers. Lloyds Banking added 1.4%, Barclays 1.2% and NatWest 1.1%.
At the other end of the blue chip index, the mining giants got off to a rough start, as China continues to deal with a surge in Covid cases. Anglo American was down 2.2%, Rio Tinto 1.1% and Antofagasta 0.9%.
In the FTSE 250, Ascential rose 8.2%. The media firm - responding to media reports - confirmed it is actively discussing "the merits" of separating some of its assets.
"As discussions are exploratory at this stage, they may or may not lead to the board making a decision to undertake a managed separation of these businesses in due course. The board is committed to open and transparent engagement with all of its stakeholders and will communicate further if and as appropriate," the company added.
This followed Sky News reporting on Saturday that Ascential was looking at demerging its digital operations and listing them separately in the US.
Shore Capital analyst Roddy Davidson said: "We are not hugely surprised to not this development given Ascential management's long-standing commitment to maximising shareholder value and optimising the group's portfolio of businesses.
"This process has featured regular acquisition and disposal activity throughout its tenure as a listed company extending a wholesale repositioning undertaken while under private equity ownership."
Staying in the midcaps, Johannesburg and London-listed Sirius Real Estate advanced 1.5% in London, after it reported it expects its annual financial performance to be in line with market expectations following an acquisition spree.
In a pre-close trading update, Sirius said total annualised rent roll of its portfolio grew 73% to EUR167.1 million for the year ended March 31, up from EUR96.5 million in the prior year.
Like-for-like annualised rent roll in Germany increased by just 6.4%, representing the eighth consecutive year of rent roll growth in excess of 5%, while rent roll in the UK grew 7.5% on a like-for-like basis.
Over the full-year period, like-for-like occupancy increased to 87.4% as at March 31 from 86.6% previously.
In the small caps, Lamprell gained 6.4% after it signed a memorandum of understanding with New York-listed energy services firm NOV Inc to support its delivery of three 1 gigawatt offshore floating wind farms for Cerulean Winds, the UK-based floating offshore wind farm and green hydrogen infrastructure developer.
"Under the terms of the MoU, NOV has stated its intent to use Lamprell as its provider for the fabrication, assembly and outfitting in relation to the construction of NOV designed tri-floaters to be used as floating foundations for the three wind farms," the company explained.
Amigo jumped 17%. The guaranteed loans provider noted it has made a "significant improvement" to its scheme redress proposals - after the UK regulator told the company it will not appear at the upcoming sanction hearings.
The scheme is being proposed to settle claims following probes from UK regulators into mis-sold loans and the way that Amigo dealt with customer complaints.
"The FCA has made clear that it will continue to engage closely with Amigo, taking into account the outcome of the sanction hearings," Amigo said on Monday.
It noted, however, the FCA has told the company it does not consider it "necessary to appear at the sanction hearings either to oppose the schemes or to present any evidence of its own concerning the schemes unless the court requests or otherwise requires assistance from it."
Chief Executive Gary Jennison said: "We thank the FCA for its confirmation that there has been a significant improvement in the fairness of the schemes compared with Amigo's first Scheme, which was rejected by the court in May 2021.
"There remain significant obstacles to overcome, including the need for a significantly dilutive equity issue, to recapitalise the ongoing business given the requirements of the schemes for the transfer of virtually all existing assets to the redress creditors."
In mainland Europe, the CAC 40 in Paris was down 0.1% but saw a spike into the green immediately after the open, while the DAX 40 in Frankfurt was down 0.7%.
Victoria Scholar, head of Investment at interactive investor, said: "It is a weaker start to the European session with the CAC, FTSE 100 and DAX all trading in the red.
"A jump in China's inflation data overnight has dampened risk appetite and oil prices while France's first round presidential election result makes another Macron landslide less likely than in 2017."
While the dollar was largely higher against major currency pairings at the start of the week, the euro edged up. The single currency was priced at USD1.0904, up from USD1.0875 on Friday night.
French President Emmanuel Macron topped the first round of presidential elections on Sunday, beating far-right rival Marine Le Pen by a larger than expected margin and setting up what is expected to be a tight run-off between the pair later this month.
Projections showed Macron scoring 28% to 29% on Sunday with Le Pen on 23% to 24%. As the top two finishers, they advance to the second round on April 24.
Despite entering the campaign late and holding just one rally before the vote, Macron performed more strongly than predicted and won immediate support on Sunday night from most of his defeated rivals ahead of the run-off.
In Asia on Monday, the Japanese Nikkei 225 index closed down 0.6%. In China, the Shanghai Composite ended 2.6% lower, while the Hang Seng index in Hong Kong lost 3.1%. The S&P/ASX 200 in Sydney ended up 0.1%.
China's factory-gate inflation was higher than expected in March, official data showed Monday, as Russia's war on Ukraine pushes up oil prices while a domestic Covid-19 resurgence strains food supplies and consumer costs.
The producer price index – measuring the cost of goods at the factory gate – grew 8.3% annually, National Bureau of Statistics figures showed.
This was slightly more than a Bloomberg poll of economists expected, while PPI also rose month-on-month.
"Geopolitical and other factors have pushed global commodity prices to continue increasing, driving the prices of oil, non-ferrous metals and other related industries to rise further domestically," NBS senior statistician Dong Lijuan said in a statement.
China's consumer price index, a key gauge of retail inflation, rose more than expected as well, by 1.5% year-on-year in March, the NBS said.
Against the yen, the dollar was trading at JPY125.15 in London, up from JPY124.33.
Brent was quoted at USD100.12 a barrel on Monday morning, down from USD101.33 a barrel Friday evening.
Gold stood at USD1,945.90 an ounce, against USD1,945.10 late Friday.
There is little data to come Monday, but the rest of the short week is full of eye-catching events, with consumer inflation from Germany and the US on Tuesday, followed by inflation data from the UK on Wednesday. The headline event, however, will be a European Central Bank rate decision on Thursday afternoon. The week will be a shortened trading week for most countries, due to Good Friday.
In the US, earnings season kicks off later this week with first quarter results due from JPMorgan Chase, Wells Fargo, Citigroup, Morgan Stanley and Goldman Sachs.
By Paul McGowan; paulmcgowan@alliancenews.com
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