London midday: Stocks stay down as earnings disappoint; GDP in focus

(Sharecast News) - London stocks were still down by midday on Thursday, dragged lower by disappointing results from the likes of BAT and Unilever, as data showed the UK economy unexpectedly eked out growth in the fourth quarter of last year.

The FTSE 100 was down 0.6% at 8,753.44, underperforming European peers, with the benchmark Stoxx 600 index up 0.6% amid Ukraine peace hopes.

Figures released earlier by the Office for National Statistics showed that gross domestic product rose 0.1% in the three months to December, beating expectations for a 0.1% contraction.

ONS director of economic statistics Liz McKeown said: "The economy picked up in December after several weak months, meaning, overall, the economy grew a little in the fourth quarter of last year.

"Across the quarter, growth in services and construction were partially offset by a fall in production. GDP per head, in contrast, fell back slightly in the quarter.

"In December wholesale, film distribution and pubs and bars all had a strong month, as did manufacturing of machinery and the often-erratic pharmaceutical industry. However, these were partially offset by weak months for computer programming, publishing and car sales."

Paul Dales, chief UK economist at Capital Economics, said the 0.1% quarter-on-quarter rise in GDP in Q4 "leaves the economy all-but stagnating" as businesses adjust to higher taxes and more uncertainty from overseas.

"We aren't expecting the economy grow much at all in the coming quarters," he said. "After stagnating in Q3, the economy was saved from the same fate in Q4 (or worse) by a 0.4% m/m rise in GDP in December (consensus +0.1%, CE -0.1%).

"That's pretty much the only growth there's been for a while as it explains all of the 0.4% rise in GDP since Labour came to power in July and the 0.3% gain since last April."

In equity markets, British American Tobacco slumped as it posted a 5.2% drop in full-year revenue, driven by the sale of its businesses in Russia and Belarus last year and translational FX headwinds, but said it swung to a profit.

BAT also said it plans to be a "predominantly smokeless" business by 2035.

Russ Mould, investment director at AJ Bell, said: "It's all very well making grand pledges to be a 'smokeless business' by 2035 but it does beg the question of what's going to replace the revenue and cash flow provided by selling cigarettes, given it is this which allows the company to sustain generous dividends and share buybacks.

"In 2024, areas like vaping and e-cigarettes contributed �250 million out of its near-�12 billion worth of adjusted operating profit. This clearly illustrates the size of the task over the next decade better than the company's observation that these areas of the business are now contributing some 17.5% of revenue.

"At a headline level the company posted a profit for 2024 but a big write down in Canada meant this was still a messy set of numbers."

Unilever lost ground as the consumer goods company said it expects a slow start to the current financial year with "subdued" market growth in the near term and announced a �1.5bn share buyback, while fourth-quarter underlying sales just missed estimates.

Barclays was weaker even as it reported a 24% jump in full-year pre-tax profit to �8.11bn and announced the launch of a �1bn share buyback.

Richard Hunter, head of markets at Interactive Investor, said: "A stable, dependable and progressive set of numbers such as these would normally fire the share price ahead, but given Barclays' recent run the height of expectation has turned into a temporary headwind."

Tate & Lyle slid as it warned that revenue for the year ending 31 March 2025 was set to be mid-single digit percent lower and for EBITDA growth to be towards the lower end of its guidance range of 4% to 7%.

Lancashire Holdings was in the red as the insurer said it expects to incur net ultimate losses of between $145m and $165m related to the California wildfires.

On the upside, Coca-Cola rallied after saying it expects organic operating profit to rise by 7% to 11% this year amid a "challenging" macroeconomic environment.

The bottling company, 20% owned by the drinks brand of the same name, also said organic revenue was forecast to grow 6% - 8% in the year, compared with average market expectations of 7.3% in a company-compiled poll.

Average analyst forecasts tipped 10.7% average growth in 2025 organic earnings before interest and taxes (EBIT).

Ferrexpo surged amid hopes of a potential peace deal between Ukraine and Russia after Donald Trump and Vladimir Putin agreed to start negotiations "immediately" with a view to ending the war.

Wizz Air was also sharply. The airline's chief executive told Reuters on Tuesday that it was aiming to restart flights to Ukraine shortly after the announcement of any ceasefire with Russia, reinstating about 30 inbound routes within six weeks.

Vistry shares sparked as it revealed that US hedge fund Abrams Capital Management has lifted its stake in the housebuilder to 10.2% from 8.2%.

Market Movers

FTSE 100 (UKX) 8,753.44 -0.61%

FTSE 250 (MCX) 20,864.61 -0.08%

techMARK (TASX) 4,770.17 0.05%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 3,244.00p 9.23%

Smurfit Westrock (DI) (SWR) 4,162.00p 3.87%

Diageo (DGE) 2,214.50p 3.77%

Croda International (CRDA) 3,222.00p 2.91%

Flutter Entertainment (DI) (FLTR) 22,440.00p 2.84%

BAE Systems (BA.) 1,243.00p 2.77%

Entain (ENT) 715.00p 2.73%

Fresnillo (FRES) 809.00p 2.21%

Legal & General Group (LGEN) 244.50p 2.17%

Pershing Square Holdings Ltd NPV (PSH) 4,526.00p 2.17%

FTSE 100 - Fallers

British American Tobacco (BATS) 3,147.00p -7.28%

Unilever (ULVR) 4,406.00p -7.26%

Barclays (BARC) 289.35p -5.98%

Shell (SHEL) 2,631.50p -2.59%

Vodafone Group (VOD) 67.50p -2.34%

NATWEST GROUP (NWG) 440.40p -2.13%

Beazley (BEZ) 832.50p -2.00%

Hiscox Limited (DI) (HSX) 1,064.00p -1.94%

Imperial Brands (IMB) 2,833.00p -1.77%

Centrica (CNA) 135.05p -1.46%

FTSE 250 - Risers

Ferrexpo (FXPO) 97.50p 7.38%

Wizz Air Holdings (WIZZ) 1,674.00p 5.15%

W.A.G Payment Solutions (WPS) 68.60p 3.31%

Bluefield Solar Income Fund Limited (BSIF) 86.10p 2.38%

Burberry Group (BRBY) 1,180.50p 2.12%

Deliveroo Class (ROO) 139.40p 1.98%

Vistry Group (VTY) 610.50p 1.75%

Investec (INVP) 542.50p 1.69%

North Atlantic Smaller Companies Inv Trust (NAS) 3,710.00p 1.64%

Dunelm Group (DNLM) 995.50p 1.63%

FTSE 250 - Fallers

Renishaw (RSW) 3,215.00p -10.20%

Tate & Lyle (TATE) 571.00p -9.65%

Lancashire Holdings Limited (LRE) 596.00p -5.25%

Renewi (RWI) 781.00p -4.29%

The Renewables Infrastructure Group Limited (TRIG) 77.00p -3.51%

NextEnergy Solar Fund Limited Red (NESF) 66.50p -3.34%

Target Healthcare Reit Ltd (THRL) 83.20p -2.92%

Frasers Group (FRAS) 613.00p -2.85%

Greencoat UK Wind (UKW) 115.20p -2.78%

Indivior (INDV) 792.00p -2.76%