London open: Stocks steady as UK GDP misses forecasts

London stocks were steady in early trade on Friday as the latest UK GDP data missed expectations and as Donald Trump ramped up his trade war rhetoric, announcing new tariffs on Canadian goods.

At 0820 BST, the FTSE 100 was flat at 8,977.96, having hit record highs on Thursday.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Donald Trump is rattling sabres in his trade war again, causing more nervousness to creep into sentiment. The US President has ratcheted up threats against Canada promising duties of 35% on imports, while blanket tariffs of 15-20% are being planned for other nations.

"The baseline assumption is that these will eventually be negotiated down, and that’s it’s a tactical ploy. Nevertheless, there is plenty of weariness around about the more fractured nature of trade relationships in the Trump era. There had been hopes that the EU had inched closer to a deal with the US, but it remains elusive for now, with the President telling leaders to expect a letter detailing new tariffs terms today or tomorrow."

On home shores, figures from the Office for National Statistics showed the economy unexpectedly shrank in May, weighed down by faltering performances in manufacturing and construction.

The economy shrank 0.1% on the month following a 0.3% contraction in April. Economists were expecting 0.1% growth.

Monthly services grew by 0.1%, following a 0.3% fall in the preceding month.

But production slid 0.9%, compounding the previous month’s 0.6% decline, while construction all but reversed April’s 0.8% growth, down 0.6%.

In the three months to May, however, real GDP was estimated to have grown 0.5% overall. That was supported by a rise of 0.4% in March, and strength in the service sector.

Liz McKeown, director of economic statistics at the ONS, said: "May’s fall in production was driven by oil and gas extraction, car manufacturing and the often-erratic pharmaceutical industry."

Streeter said: "Amid higher trade tensions, the latest growth snapshot for the UK may act as a bit of a drag on confidence. The economy contracted in May by 0.1%, with a drop in production the main culprit for the contraction. This is a set-back for Chancellor Rachel Reeves who is already wedged in between a rock and a hard place when it comes to the public finances. A fall in activity is likely to hit tax receipts, just at a time when there’s a bigger hole to fill after the government was forced to backtrack on spending cuts to welfare."

Investors were also mulling the latest BRC-Sensormatic footfall monitor data, which showed that retail footfall eased across UK high streets in June as extreme heat and heavy downpours put off shoppers.

Corporate news was thin on the ground but BP gained even as it said that second-quarter earnings would be hit by weaker oil and gas prices, despite a rise in reported upstream production compared to the previous three months.

Market Movers

FTSE 100 (UKX) 8,977.96 0.03%
FTSE 250 (MCX) 21,632.30 -0.29%
techMARK (TASX) 5,153.99 -0.33%

FTSE 100 - Risers

Fresnillo (FRES) 1,490.00p 1.71%
BP (BP.) 394.30p 1.43%
Aviva (AV.) 622.80p 1.04%
Rolls-Royce Holdings (RR.) 984.00p 0.88%
Babcock International Group (BAB) 1,079.00p 0.84%
Pershing Square Holdings Ltd NPV (PSH) 4,200.00p 0.77%
BAE Systems (BA.) 1,891.00p 0.75%
Hiscox Limited (DI) (HSX) 1,235.00p 0.65%
International Consolidated Airlines Group SA (CDI) (IAG) 372.30p 0.65%
British American Tobacco (BATS) 3,728.00p 0.57%

FTSE 100 - Fallers

Smith & Nephew (SN.) 1,136.50p -1.64%
Ashtead Group (AHT) 4,864.00p -1.14%
Diageo (DGE) 1,927.50p -1.05%
Kingfisher (KGF) 278.60p -0.96%
Spirax Group (SPX) 6,280.00p -0.87%
JD Sports Fashion (JD.) 89.84p -0.86%
Weir Group (WEIR) 2,602.00p -0.84%
Berkeley Group Holdings (The) (BKG) 3,670.00p -0.81%
Smurfit Westrock (DI) (SWR) 3,511.00p -0.79%
WPP (WPP) 430.10p -0.76%

FTSE 250 - Risers

Grafton Group Ut (CDI) (GFTU) 962.90p 3.01%
Aston Martin Lagonda Global Holdings (AML) 83.00p 1.53%
Bakkavor Group (BAKK) 218.50p 1.39%
Coats Group (COA) 83.50p 1.33%
W.A.G Payment Solutions (WPS) 87.60p 1.15%
Allianz Technology Trust (ATT) 437.00p 1.04%
Jupiter Fund Management (JUP) 121.20p 1.00%
Marshalls (MSLH) 266.00p 0.95%
Greggs (GRG) 1,755.00p 0.86%
Discoverie Group (DSCV) 718.00p 0.84%

FTSE 250 - Fallers

SSP Group (SSPG) 179.30p -4.63%
Renishaw (RSW) 2,790.00p -2.79%
CMC Markets (CMCX) 235.00p -2.49%
Pagegroup (PAGE) 259.40p -2.48%
C&C Group (CDI) (CCR) 166.00p -2.35%
Kier Group (KIE) 198.40p -2.27%
Bellway (BWY) 2,580.00p -2.05%
Sirius Real Estate Ltd. (SRE) 91.75p -2.03%
Oxford Nanopore Technologies (ONT) 150.30p -2.02%
Currys (CURY) 117.10p -1.51%