London open: FTSE little changed after GDP as politics dominate

(Sharecast News) - London stocks were little changed in early trade on Thursday as investors mulled the latest UK growth figures, with all eyes still firmly on the political landscape as Prime Minister Keir Starmer faced a leadership challenge.

At 0840 BST, the FTSE 100 was up just 0.1% at 10,331.43, while sterling was down 0.1% against the dollar at 1.3513.

Health secretary Wes Streeting was reportedly set to resign on Thursday and launch a leadership challenge against Keir Starmer. Energy secretary Ed Miliband and Angela Rayner could also join the fight to become prime minister.

Susannah Streeter, chief investment strategist at Wealth Club, said "the scale of the revolt by backbench MPs, and the prospect of a leadership challenge from Health Secretary Wes Streeting, is keeping headlines occupied and investors on edge".

"UK gilt yields have retraced from the multi-decade highs of 5.13% reached earlier this week, but they are likely to remain volatile as machinations in Westminster stay front of mind."

On the macro front, figures from the Office for National Statistics showed the economy grew in the first quarter, in line with expectations. GDP increased by 0.6% in January to March, following a revised 0.2% uplift in the fourth quarter.

While all sectors contributed to the uplift, the main driver was services, which grew by 0.8%.

Liz McKeown, director of economic statistics at the ONS, said: "Growth picked up in the first quarter of the year, led by broad-based increases across the services sector.

"Within that wholesale, computer programming, and advertising performed particularly well.

"Production also grew slightly, while construction returned to growth, though only partly reversing weakness at the end of last year."

Investors were also keeping an eye on Trump's meeting with Xi Jinping in China.

Neil Wilson, UK investor strategist at Saxo Markets, said: "Everyone is hopeful that Trump and Xi find a way to discuss Iran at their summit and find a path to reopen the Strait of Hormuz, with the drop in oil supplies and jump in energy prices starting to send inflation higher.

"Apparently, Xi asked Trump if the US and China could avoid the Thucydides Trap as the summit kicked off - way to go to underline just how important this meeting is in term of the global geopolitical and economic order."

In equity markets, Legal & General jumped to the top of the FTSE 100 aftter the Financial Times cited sources as saying that potential bidders have considered a full takeover of the company.

Land Securities rallied as it posted a drop in full-year pre-tax profit to £346m from £393m, but the number was ahead of analysts' expectations for £309m.

Spire Healthcare rocketed after the private hospital group said it had received a 250p-per-share takeover proposal from Toscafund Asset management - its second-largest shareholder - that it would be minded to recommend.

Watches of Switzerland was also a high riser as it reported record full-year revenue, driven by the US.

On the downside, 3i Group tanked as the private equity and infrastructure investment firm's full-year results failed to impress.

Burberry tumbled despite hailing a "meaningful inflection point" and saying it swung to a full-year profit, with comparable sales growth in the final quarter beating expectations.

Richard Hunter, head of markets at Interactive Investor, said: "The inflationary impacts of the conflict, along with European tariffs announced by the US have tended to weigh on the luxury fashion sector, which in turn has taken some of the shine from Burberry's performance of late. The shares have nonetheless risen by 21% over the last year, as compared to a gain of 20% for the wider FTSE100, enabling the group to rejoin the premier index in September. In addition, the shares are ahead by 31% since the appointment of the new CEO.

"However, there remains something of a mountain to climb, such that investors are ready to accept but are not yet fully convinced of a sustained recovery, as evidenced by a surprisingly downbeat reaction to the numbers. The market consensus of the shares as a hold, albeit a strong one, could therefore remain in place for the time being despite an update which shows that this recovery is well on track."

Aviva lost ground despite saying it was on track to meet full-year targets after a large jump in first-quarter premiums.

Coca-Cola HBC, BP and Pagegroup all fell as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 10,331.43 0.06%

FTSE 250 (MCX) 22,609.09 0.36%

techMARK (TASX) 5,910.04 0.32%

FTSE 100 - Risers

Legal & General Group (LGEN) 259.90p 4.63%

Barclays (BARC) 433.40p 2.77%

British American Tobacco (BATS) 4,874.00p 2.31%

Standard Life (SDLF) 760.50p 1.81%

Land Securities Group (LAND) 579.50p 1.75%

National Grid (NG.) 1,293.00p 1.49%

Persimmon (PSN) 1,074.50p 1.46%

Barratt Redrow (BTRW) 252.60p 1.32%

Lloyds Banking Group (LLOY) 96.10p 1.28%

NATWEST GROUP (NWG) 569.60p 1.21%

FTSE 100 - Fallers

3i Group (III) 1,982.00p -18.53%

Burberry Group (BRBY) 1,122.00p -4.17%

Antofagasta (ANTO) 4,217.00p -1.84%

Coca-Cola HBC AG (CDI) (CCH) 4,194.00p -1.64%

Anglo American (AAL) 4,013.00p -1.47%

BP (BP.) 537.60p -1.34%

Tesco (TSCO) 455.30p -1.23%

Aviva (AV.) 610.20p -1.07%

Glencore (GLEN) 588.00p -0.64%

Pershing Square Holdings Ltd NPV (PSH) 4,116.00p -0.63%

FTSE 250 - Risers

Spire Healthcare Group (SPI) 207.50p 41.29%

Watches of Switzerland Group (WOSG) 600.50p 12.24%

W.A.G Payment Solutions (EWG) 109.20p 7.06%

HGCapital Trust (HGT) 364.00p 3.56%

Avon Technologies (AVON) 1,550.00p 3.03%

Premier Foods (PFD) 201.80p 2.89%

Aston Martin Lagonda Global Holdings (AML) 47.70p 2.80%

RHI Magnesita N.V. (DI) (RHIM) 2,785.00p 2.20%

Trainline (TRN) 210.00p 1.95%

Ocado Group (OCDO) 189.70p 1.93%

FTSE 250 - Fallers

Pagegroup (PAGE) 119.40p -3.29%

Partners Group Private Equity Limited. (EUR) (PEY) 8.14p -2.63%

JPMorgan Japanese Inv Trust (JFJ) 781.00p -2.52%

Greencoat UK Wind (UKW) 99.10p -2.41%

Morgan Sindall Group (MGNS) 4,574.00p -2.06%

B&M European Value Retail (BME) 160.70p -2.02%

Fidelity China Special Situations (FCSS) 301.00p -1.64%

Rank Group (RNK) 95.00p -1.55%

Hochschild Mining (HOC) 675.00p -1.46%

Bluefield Solar Income Fund Limited (BSIF) 77.50p -1.40%