FTSE 100 gains as UK economy grows as expected in second quarter

  • FTSE 100 rises 26 points to 7,408

  • UK GDP growth confirmed at 0.3% in second quarter

  • Dixons Carphone tanks on profit warning 


10.30am: Weak consumer spending figures a worry, economists say

Second quarter UK economic growth was unrevised but consumer spending rose just 0.1%, the least since the fourth quarter of 2014.

“This result is particularly worrying, given retail sales data had suggested the combination of a late Easter and the second warmest June on record had given retailers temporary respite from the household income squeeze,” said James Smith, developed markets economist at ING Research.

Nancy Curtin, chief investment officer at Close Brothers Asset Management, said the small rise in wage growth has been negated by rising inflation taking a bite out of consumer spending power.

“Fears of cheap consumer debt fuelling spending is proving to be a thorn in the ’s side as it tries to navigate the potential need for a rate rise,” Curtin added. 


10.10am: UK economy nearing a ‘Brexit-induced cliff-edge’

Sluggish economic growth in the UK adds credence to the notion of the UK economy nearing a Brexit-induced cliff-edge, according to Jasper Lawler at London Capital Group. 

“Recent signs of falling business confidence become of particular concern when they translate into the ‘hard data’. Nonetheless, while UK growth trudges along at a slow pace, the will view it as offset by above-target inflation,” he said.

“The decision whether to raise rates is still finely balanced and we expect the Bank of England to continue to do what they know best, nothing.”


10.00am: Business investment flat, exports rise less than forecast

The ONS GDP figures showed business investment was flat during the second quarter at a 0.6% rise, compared to expectations of 0.4%.

Capital investment was also stronger than expected at 0.7%, beating estimates for a 0.4% decline.

Government spending rose 0.6% against expectations for a 0.3% gain.

But exports rose by just 0.7%, compared to the 1.0% increase forecast

Among sectors, service was the only positive contributor to GDP with a 0.5% quarterly rise.

In contrast, production fell 0.3%, construction dropped by 1.3% and agriculture dipped by 0.4%. 

The pound is slightly higher versus the dollar and the euro following the UK GDP figures.

Sterling rose 0.25% against the euro at €1.0868 and 0.12% against the dollar at US$1.2815.


9.30am: Second estimate of second quarter UK GDP unchanged

The UK economy grew by 0.3% in the three months to June, in line with previous estimates and as expected by analysts, the Office for National Statistics revealed in its second estimate. 

This compares to a 0.2% quarter-on-quarter increase in the first three months of the year.

The annual rate of growth was 1.7% in the second quarter, also unchanged from earlier estimates and as expected by analysts. 

“GDP growth has slowed markedly in the first half of the year with relatively robust services growth, partly thanks to a booming film industry, offset by weak performances from manufacturing and construction in the second quarter,” Darren Morgan, the ONS’ head of GDP said in a statement.

“Household spending grew weakly, with the lower-value pound hitting household budgets, while business investment showed no growth at all.”

8.50am: FTSE begins on the front foot

The FTSE 100 got off to a positive start as it rose 19 points to 7,401.65 in early trade ahead of the UK quarterly economic growth figures and the kick-off of the central bankers’ shindig at Jackson Hole in Wyoming.

If the markets have been fairly subdued in the days ahead of the Bank Holiday break, individual stock movements have been anything but.

The 66% wiped off lender Group PLC () Tuesday – the biggest one-day fall in the value of a FTSE 100 stock.

It made advertising giant WPP’s () 11% reversal Wednesday look mild.

Dixons Carphone (LON:DC) kept the run going as it tanked almost 30% after sounding the earnings alarm. It wasn’t quite as catastrophic as Provvy’s alert, but investors were hurting.

“Dixons Carphone stoked fresh fears about the health of the UK retail sector with a profits warning amid a tough mobile phone market and lower earnings from its software division,” said Neil Wilson, senior market analyst at ETX Capital.

“After the collapse, another profits warning is probably the last thing the City needs right now.”

Proactive news headlines:

Platinum group metals and chrome producer PLC said it has inked a strategic co-operation agreement with the Shanxi Taigang Wanbang Furnace Charge Co, a joint venture company of the Chinese giant Taiyuan Iron & Steel Co (TISCO). The five-year deal, which starts next month, will see supply a minimum of 240,000 tonnes of metallurgical-grade chrome concentrate, which is around a quarter of its production.

TyraTech Inc. () (LON: TYRU) said today that its overall trading remains satisfactory and the life sciences technology company expects to report results in-line with current market expectations. The one-line trading update came as the AIM-listed firm revealed it will announce its results for the six months ended 30 June 2017 on September 12.

() is set to launch its LPLDL cholesterol and blood pressure lowering strain in the United States next month. The life sciences group will exhibit at the Supply Side West trade show in Las Vegas at the end of September where it will present various products that contain the LPLDL strain, including CholBiome and CardioBiome.

Group PLC (), a specialist in turning waste into synthesis gas, said it had recruited a new chairman as well as successfully completing an oversubscribed £1.6mln City fundraiser. The appointment first: Powerhouse has brought on board Dr Davies, founder of gas-to-power firm , which he brought to AIM and then subsequently helped sell to Balfour Beatty Infrastructure Partners for £60mln.

() has told investors that flow testing operations on the Icewine-2 appraisal well are due to start in Alaska next week. The company noted that this schedule represents a one week delay, caused by fine tuning of the testing procedure.

() has flagged a rescheduling of the proposal deadline for a coal bed methane pilot plant. The AIM-quoted company, in a stock market statement, told investors that the new deadline for the request for proposal (RFP) has moved to September 20 from August 23.

Cadence () said Auroch Minerals – in which Cadence currently owns a 7.7% stake – has revealed encouraging sampling results from the second round of multi-elemental analysis on waste dumps at the Tisová – Co Cu Au project. In a statement, Cadence said results from second round testing of historic waste dumps confirm cobalt presence at Tisová, as well as significant grades of copper, gold and silver.

In a separate statement today, Cadence also noted the announcement today from Bacanora Minerals PLC () – in which Cadence currently owns a 16.1% shareholding – providing an update on the Sonora Lithium  Project in Mexico, including progress on the work processes for the feasibility study and debt funding discussions.

() told investors that it expects the feasibility study at its Sonora lithium project in Mexico to be completed towards the end of this year. The explorer is currently targeting first production for 2019/2020 following an 18-month build programme.

() has told investors that a working capital funding facility with Wogen Resources has been expanded to US$11mln, form US$9mln. It comes after other changes to the Wogen funding arrangements earlier this week – which saw the retiring of a US$3mln prepayment financing and an increase in the working capital facility to US$9mln from US$6mln.

PLC () revealed today that the mineral resource estimate for its T3 exploration project in the Kalahari copper belt in Botswana has been upgraded. The revised, JORC compliant estimate comprises 36mln tonnes of ore a 1.14% copper and 12.8 grams per tonne of silver, with T3 containing approximately 409,000 tonnes of copper and 14.8mln ounces of silver.

() (CVE:GAL) said underground development of its gold mine in Omagh, Northern Ireland, continued as it posted its quarterly results. As you’d expect for a company investing in growth, Galantas was lossmaking – the net loss was C$511,876 for the three months ended June 30. More importantly, the company had C$1.68mln in the bank, which will help fund development. “I am very pleased with the progress made this quarter on developing the underground mine and I congratulate the Galantas team in Omagh on their excellent achievements,” said chief executive Roland Phelps.

() announced that Jason Baker and Miles Needham of FRP Advisory LLP, joint administrators of the company and its subsidiary, Redx Oncology Limited, have been granted permission by the High Court to make a distribution to the groups’ unsecured creditors.  The drug discovery firm said the joint administrators will shortly be sending unsecured creditors notices of intended dividend, following which claims will be adjudicated and distributions made, with all unsecured creditors to be paid in full. Redx added that this is a significant step towards the anticipated rescue of the companies as a going concerns and the termination of the administrations. 

(LON: FFX) said that, further to its announcement on 8 August regarding its conditional acquisition of CardOne, the Financial Conduct Authority has now consented to the acquisition. The group said the acquisition remains conditional on approval at the General Meeting to be held today, after which it will provide a further update on the deal and fundraising.

VinaCapital Vietnam Opportunity Fund () said today it has entered into an agreement with VinaCapital Fund Management JSC (VCFM) – like VOF, an affiliate of Cayman Islands-based VinaCapital Investment Management Limited (VCIM) to delegate certain investment management and advisory activities. VCFM – a fully licensed fund management company domiciled in Vietnam – is regulated by the State Securities Commission of Vietnam which belongs to the International Organization of Securities Commissions of which the UK and US security commissions are also participating members.

6.45am … positive start predicted

London’s FTSE 100 is expected to start Thursday in positive territory, albeit not by too much.

It is set to be typically summery (i.e. lacking major features or scheduled news flow), and much of the attention will be on macroeconomic matters – specifically UK GDP statistics for the second quarter.

As Michael Hewson, analyst at CMC Markets, points out in a note these figures have been flagged to the market and it is expecting GDP growth to mark an unchanged reading of 0.3%.

Globally, equities remained a little choppy. Wall Street stocks were mostly lower in Wednesday’s close.

The Dow Jones dipped 87 points, 0.4%, to finish the session at 21,812 while the S&P 500 was 0.35% lower at 2,444, and the Nasdaq lowered by 0.3% to 6,278.

In Asia, Japan’s Nikkei was down 0.34% at 19,368, meanwhile, Hong Kong’s Hang Seng moved positively, up 0.57% to 27,551. The Shanghai Composite was 0.15% lower, at 3,282.

Australia’s ASX 200 was just a smidgen higher, changing hands at 5,740 – up just 3 points for the session.

Here in the UK, CFD and spreadbetting group IG Markets sees the FTSE 100 about 3 points higher, calling the blue-chip benchmark at 7,384 to 7,388 just over an hour before the opening deals.

Ex-dividend factors will clip 2.32 points off the FTSE 100 index on Thursday, with PLC (), Group PLC (),  (),  (), and PLC () all trading without the attractions of their last dividend payout.

Thursday’s agenda

Interims: PLC (), Camelia PLC (), (),  (), John Laing Group PLC (LON:JLG), (), PLC (), Phoenix Group Holdings PLC (LON:PHNX), (), Playtech PLC (LONLPTEC),  ()

FTSE 100 ex-dividends: PLC (), Group PLC (),  (),  (), PLC ()

Economic data: UK second reading Q2 GDP; CBI distributive trades; US weekly jobless


Exxon deliberately misled public on climate science, say researchers – The Guardian

A third of food firms ‘unviable’ without EU staff – Sky News

UK car output reverses downward trend with 7.8 percent rise in July – Reuters

, Mired in Corporate Scandals, Sees Uptick in Bookings – New York Times

Amazon’s Whole Foods Deal Wins Swift US Antitrust Approval – Bloomberg

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