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LONDON (Alliance News) - The UK's main stock indices are lower Wednesday, weighed on by a number of disappointing corporate announcements, as well a revision downwards in the annual growth rate of the UK economy last year.
By mid-morning Wednesday, the FTSE 100 is down 0.4% at 6,801.25, the FTSE 250 is down 0.5% at 16,441.25, and the AIM All-Share is down 0.4% at 886.40.
The UK economy grew at a slightly slower rate over the whole of 2013 than previously thought, according to a revised reading of UK GDP released by the Office for National Statistics Wednesday. At the second of three readings, UK GDP recorded 2.7% year-on-year in the fourth quarter, revised down from the first preliminary reading of 2.8%. In the fourth-quarter alone, GDP was unrevised at 0.7%.
"The economy has been boosted by some sterling numbers of late, but we mustn?t expect too much at this stage. Like most recoveries they take time and effort and you can?t get too carried away with the first set of positive results," said UFX Markets managing director Dennis de Jong.
Total business investment in the UK increased by 2.4% in the fourth quarter, up from the 2.0% growth recorded in the third-quarter, according to data released at the same time by the ONS. Economists had been expecting a bigger rise, to 2.6%.
The pound has broadly remained unaffected around the biggest UK economic release of the week so far. After a bit of volatility on the announcement of the numbers, sterling remains slightly higher against the dollar at USD1.6690.
The euro is also stable against the greenback, currently trading at USD1.3745.
Within UK equities, the food and drug retailers lead the falls as the UK supermarkets get stuck into a new price war. At an event on Tuesday Tesco updated investors and analysts on its long-term strategy. The headline announcement was that Tesco will cut its annual group capital expenditure to GBP2.5 billion for at least three years. Tesco is also planning to focus on lower regular pricing rather than sporadic offers. Asda immediately replied, saying it too will increase its focus on price cutting. Tesco is one of the biggest blue-chip fallers Wednesday, down 3.8%. Sainsbury's is down 1.6% and Morrison is down 1.0%.
ITV is the biggest single blue-chip faller. Although the group announced impressive full-year results, investors have been disappointed that higher cash payouts have not been made after the special dividend was kept at the same level at 2012.
Weir Group is the stand-out blue chip gainer. In an opposite move to ITV, the engineering group saw its profits fall year-on-year, but raised its total dividend by 11%, keeping investors happy.
A number of big names going ex-dividend Wednesday are creating noticeable moves on indices. Easyjet leads the falls on the FTSE 100, while Beazley leads the FTSE 250 lower. Diageo and Playtech are also amongst the names names going ex-dividend Wednesday.
Still to come Wednesday, US MBS mortgage approvals data at midday, followed by US new home sales at 1500 GMT.
By Jon Darby; jondarby@alliancenews.com; @jondarby100
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