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(Alliance News) - The FTSE 100 tread water on Thursday afternoon, as share price declines for some of London's heavyweights offset a strong start for the index, which got a boost from Bank of England rate cut hopes.
The FTSE 100 index traded just 1.49 points at 7,569.89 in early afternoon dealings.
The FTSE 250 was up 48.26 points, 0.3%, at 19,052.15, and the AIM All-Share was up 1.42 points, 0.2%, at 751.87.
The Cboe UK 100 was up 0.1% at 756.96, the Cboe UK 250 edged slightly higher to 16,466.48, and the Cboe Small Companies was up 0.2% at 14,426.29.
The pound was quoted at USD1.2547 early Thursday afternoon, up from USD1.2542 at the London equities close on Wednesday, but off the USD1.2573 it bought in the early hours of the morning.
The UK economy suffered a sharper than expected decline in the final quarter of last year, entering a technical recession, according to numbers from the Office for National Statistics on Thursday.
UK gross domestic product slumped 0.3% in the three months to December from a quarter earlier, underperforming the expected 0.1% fall, according to consensus cited by FXStreet.
The UK economy had declined 0.1% quarter-on-quarter in the third-quarter of 2023.
It means the UK has entered a technical recession, which is generally defined as two successive quarterly falls in gross domestic product.
"As expected, the UK economy slipped into a technical recession," Deutsche Bank analyst Sanjay Raja commented.
"For the [Bank of England's Monetary Policy Committee], this is a meaningful miss on GDP. There's clearly more spare capacity in the economy than assumed in their recent projections. While the Bank of England's focus will likely remain on price data, the bigger drop in output and the politics of being in a technical recession will no doubt become uncomfortable especially with bank rate at highly restrictive levels."
Data from Japan showed the nation has also entered into recession. Japan's economy contracted 0.1% in the three months to December, from a quarter earlier, according to the preliminary data released by the Cabinet Office, missing market expectations of growth of 0.3%, according to FXStreet.
It was the second straight quarterly drop in output after a revised 0.8% contraction in the July-September quarter, the data showed.
Societe Generale analyst Kit Juckes commented: "So far, [fourth quarter] GDP data releases cold barely paint a starker picture: 3.3% annualised growth in the US, flat for the Eurozone, down 1.2% annualised for the UK and down 0.4% annualised for Japan. If growth is all that matters, the UK and eurozone need to get on with rate cuts sharpish, and the [US Federal Reserve] has no reason to hurry, perhaps no reason to cut at all if the data go on as they have been.
"The Bank of Japan still has every reason to get itself out of the current yield curve control and negative interest rate policies, but no reason to do more. It all screams 'strong dollar' and laughs in the face of [foreign exchange] forecasts – notably ours, which are the only ones I care about. Should we stick to our view that a very expensive dollar needs a daily diet of better-than-expected data just to keep it where it is, and will eventual fall, or should we just embrace American exceptionalism?"
The euro stood at USD1.0735 early Thursday afternoon, up from USD1.0720 late Wednesday. Against the yen, the dollar was trading at JPY150.02, down from JPY150.62. The Japanese currency was supported by the lingering possibility of foreign exchange intervention by officials in Japan.
In London, Shell and BP shares fell 2.5% and 2.9%, on a weaker oil price, as US Crude stockpiles built up.
US Crude oil inventories surged by 12.0 million barrels for the week ended February 9 to 439.4 million barrels, the US Energy Information Administration reported on Wednesday. When oil inventories rise, traders can take this as a signal that demand is lacking.
Brent oil was quoted at USD81.00 a barrel midday Thursday, down from USD82.63 late Wednesday.
Also putting pressure on the FTSE 100, tobacco company Imperial Brands fell 3.9%. Its stock went ex-dividend on Thursday, meaning new buyers do not qualify for the latest payout.
Elsewhere, Close Brothers slumped 26%, the worst FTSE 250 performer after axing its dividend.
Close Brothers cautioned on a "potential financial impact" stemming from the UK Financial Conduct Authority's probe of historical motor finance commission arrangements.
The UK financial services watchdog in January explained it is probing whether compensation could be due for people who were potentially overcharged for car loans.
Travel stocks were on the rise. International Consolidated Airlines Group was among the best FTSE 100 performers, up 3.2% in a positive read across after Jet2 lifted guidance.
The airline and package holiday operator said forward bookings were strong during the 2023/2024 winter season, citing a 21% increase in on sale seat capacity, as well as passenger sectors booked currently up by 17%.
It also said average pricing for both flight-only and package holiday products was "robust".
The firm expects a pretax profit before foreign exchange revaluation outcome between GBP510 million and GBP525 million for the year to March 31, above its previous GBP480 million to GBP520 million outlook.
Jet2 rose 2.9%.
In mainland Europe, eyes were on shares in the automotive space. Renault added 6.1% in Paris, while Stellantis revved 4.8% higher in Milan.
Boulogne-Billancourt-based Renault, whose stable includes the low-cost Dacia and sporty Alpine brands, earned a group share net profit of EUR2.20 billion last year after suffering a heavy hit in 2022 from writing off its Russian assets. It swung from a net loss of EUR354 million in 2022.
Sales revenue rose by 13% to EUR52.38 billion from EUR46.33 billion, as the company was able to raise prices and sold more high-end vehicles.
Stellantis unveiled a new share buyback amid record annual revenue and profit.
The Hoofddorp, Netherlands-based carmaker which owns Citroen, Peugeot and Fiat brands said net profit grew 11% in 2023 to EUR18.63 billion from EUR16.78 billion the year prior.
Stellantis said net revenue increased around 5.5% to EUR189.54 billion from EUR179.59 in 2022, with consolidated shipment volumes increasing 7%.
It launched a new EUR3.0 billion share buyback programme and increased the annual dividend by 15% to EUR1.55 from EUR1.34.
Gold was quoted at USD1.997.62 an ounce midday Thursday, up from USD1,988.99 at the time of the European equities close on Wednesday.
Still to come on Thursday is the latest US initial jobless claims reading and retail sales at 1330 GMT.
By Eric Cunha; Alliance News news editor
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