London stocks ended higher on Tuesday as investors mulled the latest UK GDP data and shrugged off concerns about a potential government shutdown across the pond.
The FTSE 100 closed up 0.5% at 9,350.43 – a fresh record high.
Commenting on the potential for a US government shutdown, Russ Mould, investment director at AJ Bell, said: “Relations between the Democrats and Republicans are frostier than an Alaska morning, so markets are not confident on the prospects of agreeing a deal before midnight tonight,” he said.
“One of the biggest short-term concerns for markets is the impact this would have on the release of government data – particularly the jobs number due on Friday – without which the Federal Reserve might not feel as confident about cutting interest rates.”
On home shores, figures from the Office for National Statistics showed that economic growth ticked higher in the second quarter, in line with expectations.
GDP was estimated to have grown by 0.3% in the three months to June, following an unrevised 0.7% uplift in the first quarter.
Within that, the dominant services sector rose by 0.4% and construction by 1%, helping to offset ongoing weakness in the manufacturing sector. Production softened 0.8%.
Year-on-year, GDP rose by 1.4%, marginally ahead of forecasts for a 1.2% increase.
Liz McKeown, director of economic statistics at the ONS, said: “In the latest quarter, we saw an increase in the household saving ratio, very little growth in consumer spending and a slight fall in output for consumer-facing services, despite growth in services overall.”
McKeown also addressed recent changes to the methodologies used by the ONS.
She said: “Today’s figures include a suit of improvements to our measurement of the economy, including better information on research and development and the activities of complex multinational companies, alongside the usual inclusion of updated and improved data sources.
“Growth for 2024 as a whole was unrevised, though these new figures show the economy grew a little less strongly at the start of the year than our initial estimates suggested, but performed better in the later quarters.”
The ONS has come under sustained criticism in recent months after issues in its data gathering emerged, weighing on the veracity of a number of its statistical bulletins.
Elsewhere, the British Retail Consortium warned of more pain ahead for shoppers as price pressures for consumers picked up this as month food prices continued to climb and non-food price deflation eased.
The BRC-NIQ Shop Price Monitor showed that the annual rate of shop price inflation increased to 1.4% in September from 0.9% in August.
In equity markets, building materials provider CRH shot to the top of the FTSE 100 as it reaffirmed its full-year guidance and set out financial targets over the next five years.
PayPoint rallied as it said that Royal Mail owner International Distribution Services has taken a 49% stake in Collect+ for £43.9m and announced a special dividend as a result of the deal.
On the downside, Flutter Entertainment, Ladbrokes owner Entain and – formerly 888 Holdings – all fell sharply after chancellor Rachel Reeves hinted on Monday at potential UK gambling tax rises in the November budget.
Alex Smith, VP, Global Lead at Third Bridge, said: “Our experts say the market is bracing for two main scenarios: either aligning the current 15% sports betting duty with the 21% gaming tax or raising the gaming tax further to 25%.
“Both options would weigh heavily on operators, but the latter is seen as the more damaging outcome. Flutter Entertainment and its peers are already deep into scenario planning, testing mitigation strategies to cushion any shock from November’s announcement.”
Close Brothers dipped as it said it fell into the red in the year to 31 July, with operating income 2% lower at £681.2m after a decreasing loan book weighed on income in its core banking division.
Adjusted operating profits from continuing operations fell 14% to £144.3m. That was ahead of consensus, as lower impairment charges helped partially offset the decline in income and higher costs.
However, operating losses swelled to £122.4m, compared to pre-tax profits of £132.7m a year previously, hit by a £165m provision charge relating to motor finance commissions as well as weak trading its rentals business.
The merchant bank also said it had decided to exit its vehicle hire business, which has been loss making “in a challenging market environment”.
Legal & General was a touch weaker as it said its chief financial officer of eight years, Jeff Davies, has handed in his resignation. The head of L&G’s Institutional Retirement division, Andrew Kail, was named as his replacement.
Outside the FTSE 350, online fashion retailer Asos slid as it warned that full-year adjusted EBITDA was set to be towards the lower end of the £130m to £150m guided range.
Market Movers
FTSE 100 (UKX) 9,350.43 0.54%
FTSE 250 (MCX) 22,015.56 0.68%
techMARK (TASX) 5,452.76 0.34%
FTSE 100 – Risers
CRH (CDI) (CRH) 8,884.00p 6.09%
Airtel Africa (AAF) 244.00p 5.35%
Reckitt Benckiser Group (RKT) 5,718.00p 3.85%
GSK (GSK) 1,574.50p 3.72%
Melrose Industries (MRO) 608.80p 2.73%
Rentokil Initial (RTO) 375.80p 2.51%
JD Sports Fashion (JD.) 95.30p 2.45%
Hikma Pharmaceuticals (HIK) 1,698.00p 2.35%
Rolls-Royce Holdings (RR.) 1,190.00p 2.28%
Beazley (BEZ) 907.00p 2.20%
FTSE 100 – Fallers
Flutter Entertainment (DI) (FLTR) 19,340.00p -8.25%
Entain (ENT) 873.80p -3.53%
Pershing Square Holdings Ltd NPV (PSH) 4,614.00p -2.37%
BP (BP.) 425.75p -2.04%
Antofagasta (ANTO) 2,751.00p -2.00%
Shell (SHEL) 2,646.50p -1.84%
Metlen Energy & Metals (MTLN) 47.35p -1.35%
InterContinental Hotels Group (IHG) 8,974.00p -1.28%
BT Group (BT.A) 191.15p -1.14%
Ashtead Group (AHT) 4,965.00p -0.90%
FTSE 250 – Risers
PayPoint (PAY) 751.00p 11.42%
Kainos Group (KNOS) 944.50p 5.65%
Victrex plc (VCT) 720.00p 4.65%
Dr. Martens (DOCS) 99.35p 3.98%
AJ Bell (AJB) 538.50p 3.86%
Baltic Classifieds Group (BCG) 310.00p 3.51%
Genuit Group (GEN) 367.50p 3.09%
Keller Group (KLR) 1,508.00p 2.86%
Marshalls (MSLH) 180.80p 2.84%
IntegraFin Holding (IHP) 347.00p 2.81%
FTSE 250 – Fallers
Pantheon Infrastructure (PINT) 110.00p -2.65%
Investec (INVP) 555.50p -2.37%
BH Macro Ltd. GBP Shares (BHMG) 391.50p -1.51%
Barr (A.G.) (BAG) 668.00p -1.47%
Hochschild Mining (HOC) 355.40p -1.44%
Anglo-Eastern Plantations (AEP) 1,380.00p -1.43%
Trainline (TRN) 279.20p -1.34%
NB Private Equity Partners Ltd. (NBPE) 1,490.00p -1.32%
Harbour Energy (HBR) 207.40p -1.14%
Pinewood Technologies Group (PINE) 415.00p -1.07%