Market report

GDP up in October, factories shrink | stocks close lower


5pm: London lower despite GDP uplift

The FTSE 100 closed 30.66 points lower at 7,445.97 despite positive news for the UK economy.

GDP is estimated to have grown by 0.5% in October following a fall of 0.6% in September, which was affected by the additional bank holiday for the State Funeral of the Queen. Economists had expected a 0.4% rise in October.

Figures from the Office for Budget Responsibility show that over the three months to October the economy shrank 0.3%. 

The Make UK/BDO outlook report shows the manufacturing sector shrank by about 4% this year and is forecast to decline by a further 3.2% in 2023.

The study showed that investment in the sector has gone “negative” for the first time in nearly two years.

The report suggests that the manufacturing sector is likely to be 7% smaller by the end of next year.

Commenting on the GDP figure, Chancellor Jeremy Hunt said: “High inflation, exacerbated by Putin’s illegal war, is slowing growth across the world, with the IMF predicting a third of the world economy will be in recession this year or next. 

“While today’s figures show some growth, I want to be honest that there is a tough road ahead. Like the rest of Europe, we are not immune from the aftershocks of Covid-19, Putin’s war and high global gas prices. 

“Our plan has restored economic stability and will help drive down inflation next year, but also lay the foundations for long-term growth through continued record investment in new infrastructure, science and innovation.”

7am: Springfield Properties

Springfield Properties said the rise in interest rates and broader economic uncertainty in the last two months have impacted reservations for the group’s private housing.

In a trading update for the six months to the end of November, the group said its plans to deliver homes for the private rented sector (PRS) are unlikely to come forward in the next couple of years following the Scottish Government’s introduction of a temporary rent freeze.

Full story here

Global markets

London’s stock market was tipped to open lower ahead of another key week for interest rates.

The US Federal Reserve announces its next interest rate decision on Wednesday, followed by the Bank of England and the European Central Bank on Thursday.

Markets are expecting all three to raise rates by 50 basis points, half a percentage point.

Sterling was quoted at $1.2225 early Monday, lower than $1.2301 at the London equities close on Friday.

China said it will retire an app used to track Covid-19 contacts, as it pulls back from its zero-tolerance coronavirus strategy. China last week announced an end to large-scale lockdowns and mandatory quarantine in central facilities, and a broad relaxation of testing measures.

In Asia, Japan’s Nikkei 225 index was down 0.2%. In China, the Shanghai Composite was down 0.8%, while the Hang Seng index in Hong Kong was down 2.3%. .

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