(Alliance News) - Stock prices in London were mostly higher at midday on Friday, despite disappointing data including weaker-than-expected gross domestic product growth.
In the third quarter, UK GDP edged up 0.1%, missing the 0.2% consensus, and slowing from 0.5% seen between April and June, according to the Office for National Statistics.
"Retail was one bright spot, and construction was also in positive territory, but this wasn't enough to offset notable declines in manufacturing output, information and communication services, as well as entertainment and recreation," Hargreaves Lansdown analyst Derren Nathan commented. "Industrial production also missed forecasts, falling by 0.5% over the month."
"The start of the year looked so promising as the UK economy hurtled back from a short and shallow recession with relatively chunky GDP growth," said AJ Bell's Danni Hewson. "But that momentum was short lived, and the honeymoon period often enjoyed by a new government fizzled out under the damp weight of uncertainty and hard truths.
"The government might desire growth and the chancellor might have been making more of the right noises during her Mansion House speech last night, but many businesses fear measures taken in her first budget could have the opposite effect."
AJ Bell's Russ Mould commented: "The latest UK GDP figures offered evidence of the chilling effect of a Budget build-up filled with warnings about hard decisions. The government's gloomy messaging proved to be a self-fulfilling prophecy as growth slowed significantly."
Hewson agreed, saying: "Nervousness from households ahead of the budget dampened consumer behaviour and even though the retail sector did pick up in a bit in September people were being cautious...For business the spectre of higher taxes was already pushing many companies to employ a wait and see approach when it came to investment and hiring plans.
"The big question is what will happen to those plans now the dust has settled and the numbers have been crunched."
The FTSE 100 index was up 9.93 points, 0.1%, at 8,081.12. The FTSE 250 was up 11.68 points, 0.1%, at 20,534.49, and the AIM All-Share was up 0.87 of a point, 0.1%, at 730.25.
The Cboe UK 100 was up 0.1% at 812.65, the Cboe UK 250 was up 0.3% at 18,002.52, and the Cboe Small Companies was down 0.4% at 15,680.22.
Pharmaceutical companies were the main FTSE 100 losers. GSK was down 3.2%, Croda International lost 2.9%, and AstraZeneca was down 2.5%.
"The announcement of vaccine-sceptic Robert F Kennedy Junior as health secretary pick for the incoming Trump administration has spooked investors in the sector, with US drug companies also seeing their shares come under significant pressure overnight," explained Mould. "The impact on the sector is hard to judge fully at this stage but, at the very least, it will cause a good deal of uncertainty."
Deutsche Bank Research cut GSK to 'hold' from 'buy' late on Friday morning, while Goldman Sachs raised Croda's price target but maintained a 'neutral' rating.
Inchcape was among the FTSE 250 winners, rising 2.2%.
The distribution services provider for original equipment manufacturers said it repurchased 182,870 shares at an average of 760.24p on Thursday.
Among smaller caps, TT Electronics was still riding high at midday, up 39% after fending off two takeover bids from Volex (which was down 14%).
On AIM, Angle rose 15%.
The liquid biopsy company unveiled positive study results for two new testing products at a conference this week, one enabling ongoing monitoring of PD-L1 in metastatic lung cancer and the other designed to improve access to targeted breast cancer treatments.
Solid State lost 33%.
It said its full-year results "will be materially below current consensus expectations", as expenditure has been paused on a prominent defence order programme.
In European equities on Friday, the CAC 40 in Paris was marginally lower, while the DAX 40 in Frankfurt was up slightly.
The pound was quoted at USD1.2689 at midday on Friday in London, down compared to USD1.2713 at the equities close on Thursday. The euro stood slightly higher at USD1.0579, against USD1.0576. Against the yen, the dollar was trading lower at JPY155.36 compared to JPY155.81.
Stocks in New York were called lower. The Dow Jones Industrial Average was called down 0.4%, the S&P 500 index down 0.6%, and the Nasdaq Composite down 0.8%.
"London's lacklustre open followed a weak session on Wall Street where comments by [Federal Reserve Chair Jerome] Powell that there's no hurry for another rate cut saw the Trump Trade lose further momentum, despite confirmation that the Republicans have now won Congress in addition to the Senate," Hargreaves Lansdown's Nathan said. "But the likely slowdown in the pace of rate cuts needs to be seen against the context of an economic performance that Chair Powell described as 'by far the best of any major economy in the world'. A nice to have problem for both him and the incoming administration and a high bar for the rest of the world to catch up with."
Brent oil was quoted lower at USD71.81 a barrel at midday in London on Friday from USD72.43 late Thursday.
Gold was quoted lower at USD2,571.68 an ounce against USD2,576.68 on Thursday.
Still to come on Friday's economic calendar, there are several US releases including retail sales and industrial production.
By Emma Curzon, Alliance News reporter
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