London open: FTSE falls as investors mull UK GDP data

(Sharecast News) - London stocks fell in early trade on Thursday as investors digested the latest UK GDP data and a slew of corporate releases.

At 0845 BST, the FTSE 100 was down 0.4% at 10,475.21.

Figures from the Office for National Statistics showed the economy grew by 0.1% in May, in line with expectations.

The dominant services sector drove the growth, rising 0.3% and helping to reverse April's 0.1% dip. It also offset weakness elsewhere in the economy, with production easing 0.5% and construction 0.8%.

Over the three months to May, GDP widened by 0.7%. That was ahead of expectations for a 0.5% improvement, although the pace of growth did slow slightly compared to the upwardly-revised 0.8% print recorded in the previous quarter.

Once again the services sector drove growth, jumping 0.7%, with computer programming and advertising faring particularly well. The ONS noted that the "often-volatile" pharmaceutical industry also showed solid growth. The construction sector also rebounded, rising 1.6%.

Liz McKeown, director of economic statistics at the ONS, said: "The economy recorded robust growth in the three months to May, though the pace eased slightly as the latest two months showed a weaker picture."

Aaron Bright, investment analyst at investing and trading platform IG, said "the numbers are far from spectacular".

The broader picture remains one of a UK economy struggling to generate meaningful momentum, with growth sitting against a particularly challenging macro backdrop," he said. "Whilst the recent US-Iran ceasefire helped ease immediate fears of further escalation, the risk of tensions resurfacing remains a key concern for markets, with notable skirmishes in the Gulf already appearing since the ceasefire.

"With geopolitical uncertainty and the potentially dire consequences a prolonged conflict could cause still weighing on the outlook, today's data certainly won't fill investors with unbridled optimism."

Investors were also mulling reports that incoming prime minister Andy Burnham has decided to make home secretary Shabana Mahmood chancellor.

A spokesperson for Burnham declined to comment on "speculation", and said cabinet positions would be announced on Monday when the former Greater Manchester mayor is due to move into Downing Street.

But according to the Financial Times, citing three unnamed sources briefed on Burnham's thinking, Mahmood will be moving to Number 11. "Shabana is nailed down as chancellor," one source told the newspaper. "That's definitely happening."

There has been considerable speculation about who will replace Rachel Reeves as chancellor under Burnham. Energy secretary and former Treasury advisor Ed Miliband had been seen as a leading contender. But his focus on net zero has alienated some corporate leaders and unions, on fears that it will damage the economy, making him a risker choice for many in Burnham's team.

Mahmood - who comes from the right of the Labour Party - became home secretary last year, replacing Yvette Cooper in a cabinet reshuffle. She has not held an economic brief in government though is widely seen as a capable minister.

Markets appeared to welcome the potential appointment, with the pound rising and 10-year gilt yields easing.

On the corporate front, there was a raft of releases to sift through.

Experian and Trustpilot slumped after trading updates, while Ocado slid as the online grocery and warehouse tech group's full-year results failed to impress.

Frasers Group fell as the Sports Direct owner reported annual adjusted pre-tax profit of �538m, down 4% on the previous year, despite retail trading profit surging 22% to �912.5m.

The company also declined to provide guidance for the current fiscal year due to its takeover bids for Hugo Boss and Accent group, but cautioned that it continued to feel the impact of tough trading conditions, subdued consumer confidence and industry-wide excess inventory levels through the second half of 2025/26 and into the start of FY27.

On the upside, Diploma surged to the top of the FTSE 100 as it upgraded its full-year guidance.

Engineering firm Rotork rocketed after it agreed to be bought by Swiss engineering company ABB in a �4.1bn deal.

Dunelm also gained after the homeware retailer said full-year profit was set to be in line with its guidance and consensus, as it reported a rise in fourth-quarter sales.

Market Movers

FTSE 100 (UKX) 10,475.21 -0.39%

FTSE 250 (MCX) 23,517.63 0.24%

techMARK (TASX) 5,845.10 -0.75%

FTSE 100 - Risers

Diploma (DPLM) 7,030.00p 3.55%

Weir Group (WEIR) 2,458.00p 2.08%

Spirax Group (SPX) 6,740.00p 1.43%

Kingfisher (KGF) 288.20p 1.41%

IMI (IMI) 2,910.00p 1.32%

Smiths Group (SMIN) 2,541.00p 1.07%

DCC (CDI) (DCC) 6,375.00p 1.03%

British American Tobacco (BATS) 4,406.00p 0.68%

Imperial Brands (IMB) 2,742.00p 0.51%

Whitbread (WTB) 2,348.00p 0.47%

FTSE 100 - Fallers

Experian (EXPN) 2,570.00p -5.61%

Flutter Entertainment (DI) (FLTR) 8,106.00p -3.73%

Relx plc (REL) 2,440.00p -2.36%

Compass Group 11 (CPG) 30.86p -2.06%

Entain (ENT) 564.20p -1.74%

Prudential (PRU) 1,051.00p -1.73%

Smith & Nephew (SN.) 1,136.50p -1.22%

Vodafone Group (VOD) 110.90p -1.16%

St James's Place (STJ) 1,187.00p -1.12%

Melrose Industries (MRO) 460.70p -0.99%

FTSE 250 - Risers

Rotork (ROR) 486.00p 66.85%

Dunelm Group (DNLM) 853.50p 4.40%

Avon Technologies (AVON) 1,732.00p 4.34%

W.A.G Payment Solutions (EWG) 110.00p 4.17%

Pantheon Infrastructure (PINT) 119.80p 3.28%

Oxford Nanopore Technologies (ONT) 113.80p 2.73%

WPP (WPP) 283.40p 2.05%

RS Group (RS1) 659.50p 1.70%

Ashoka India Equity Investment Trust (AIE) 251.00p 1.41%

HGCapital Trust (HGT) 390.00p 1.30%

FTSE 250 - Fallers

Ocado Group (OCDO) 157.70p -11.25%

Trustpilot Group (TRST) 263.40p -9.97%

Frasers Group (FRAS) 730.00p -4.33%

Raspberry PI Holdings (RPI) 732.00p -3.37%

Ninety One (N91) 219.00p -3.10%

THG (THG) 29.70p -2.88%

Seraphim Space Investment Trust (SSIT) 167.00p -2.87%

Bloomsbury Publishing (BMY) 605.00p -2.73%

Vesuvius (VSVS) 438.40p -2.40%

Premier Foods (PFD) 194.70p -2.11%