LONDON MARKET OPEN: FTSE Slips After UK Posts Record 2020 GDP Plunge

(Alliance News) - Stocks prices in London edged lower in a muted start on Friday, as traders digest the latest reading of the economy, which showed a record fall in gross domestic product in 2020, despite some recovery in the third and fourth quarters.

London's blue-chip FTSE 100 index was down 9.93 points, or 0.2%, at 6,518.79. The mid-cap FTSE 250 index was down 45.69 points, or 0.2%, at 20,972.16, and the AIM All-Share index was down 3.13 points, or 0.3%, at 1,215.67.

The Cboe UK 100 index was down 0.1% at 647.57 points. The Cboe 250 was down 0.3% at 18,451.20, and the Cboe Small Companies was down 0.1% at 12,664.49.

The CAC 40 in Paris was down 0.1% and Frankfurt's DAX 30 was 0.4% lower.

UK gross domestic product grew by 1.0% on a quarterly basis in the final three months of 2020, topping expectations of a 0.5% rise. However, this still was a marked slowdown in the economy's rebound from the Covid-19 health crisis, following a third-quarter when GDP rose by 16%.

For the whole of 2020, UK GDP fell by a record 9.9%, signalling just how badly the nation's economy has been hurt by the virus pandemic.

Annually, the UK's economic decline in the fourth quarter was less than what was forecast by market consensus. The UK's GDP was 7.8% lower year-on-year in the fourth quarter, compared to an 8.1% fall forecast.

Figures for just the month of December showed the UK economy grew 1.2% on a monthly basis. In November, GDP had fallen by 2.3%, hurt by a second national lockdown in England. Month-to-month, a 1% rise was expected by the market for December.

"The UK GDP numbers may not be cause for celebration, but avoiding a double-dip recession is a small mercy," interactive investor analyst Richard Hunter commented.

The pound was quoted at USD1.3794 early on Friday morning in the UK, down from USD1.3815 at the London equities close.

The euro stood at USD1.2111, down from USD1.2130 at the European equities close. Against the yen, the dollar was trading at JPY104.95, up from JPY104.75.

In London, London Stock Exchange Group rose 0.8% after RBC kicked off coverage of the stock with an Outperform rating.

At the other end of the large-caps, British Airways-parent International Consolidated Airlines Group fell 2.5%. Among mid-caps, easyJet fell 3.0%, Tui lost 3.6% and Carnival was down 3.9%.

UK Health Secretary Matt Hancock on Thursday said the rollout of coronavirus vaccines is "absolutely essential" for summer holidays to take place.

In addition, Berenberg cut Carnival to Sell from Hold.

Jet2 slumped 6.7%. The travel company said it tapped investors for GBP422 million through a placing and subscription.

"The UK government is continuing to advise against all non-essential travel, with a negative test result required to fly into the UK and 5 day 'test to release' or 10 day quarantine required on return to the UK from foreign travel. Official guidance therefore, remains changeable. As a result, the company continues its cautious approach to Summer 2021, with seat capacity continually being refined as UK and EU travel guidance evolves," Jet2 said late Thursday.

Highlighting the financial pressure on the holiday industry, online travel agent Lastminute.com has been threatened with court action by the UK competition watchdog for failing to pay out refunds to some customers.

The company had vowed to make GBP7 million of payments by the end of January to 9,000 customers who had holidays cancelled due to the pandemic under a formal agreement with the Competition & Markets Authority.

But the UK regulator said GBP1 million owed to 2,600 customers remains outstanding. Unless the money is paid out within seven days, court action will follow, it said.

US futures were lower on Friday morning. The Dow Jones Industrial Average and Nasdaq Composite are both called down 0.1%. The S&P 500 is called 0.2% lower.

In US data, the Michigan consumer sentiment index is released at 1500 GMT.

Analysts at Lloyds said: "US consumer sentiment fell to 79.0 in January, but tentative signs of improvement in the labour market and hopes for fiscal stimulus measures (politicians are still discussing it) may result in an improvement this month. We forecast a modest rise to 80.5, keeping it above last spring's lows. Although sentiment remains below pre-pandemic levels."

Brent oil was quoted at USD60.56, down from USD61.35 a barrel at the London equities close.

Gold was quoted at USD1,813.89, down from USD1,836.55.

By Eric Cunha; ericcunha@alliancenews.com

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