(Sharecast News) - London stocks ended firmly in the black on Friday after a volatile week of trading rocked by the latest twists and turns in Trump's trade war, as investors mulled an unexpected contraction in the UK economy.
The FTSE closed up 1.1% at 8,632.33.
Figures released earlier by the Office for National Statistics showed that gross domestic product contracted by 0.1% in January following 0.4% growth in December, and versus expectations for 0.1% growth.
Production output fell by 0.9% on the month in January following a 0.5% increase in December 2024. This was due mainly to a 1.1% fall in manufacturing output.
ONS director of economic statistics Liz McKeown said: "The fall in January was driven by a notable slowdown in manufacturing, with oil and gas extraction and construction also having weak months.
"However, services continued to grow in January led by a strong month for retail, especially food stores, as people ate and drank at home more."
Paul Dales, chief UK economist at Capital Economics, said the contraction in real GDP in January highlights the weakness of the economy before the full effects of the rise in business taxes and the uncertain global backdrop is felt.
"Overall, these figures don't do much to change our forecasts that the economy will grow by just 0.1 q/q (or perhaps 0.2% q/q) in Q1 and by only 0.7% in 2025 as a whole," he said. "With the prospect of higher taxes from April having left business sentiment on the floor and the global backdrop deteriorating, the economy is unlikely to strengthen much from here."
In equity markets, Melrose Industries was the standout performer on the FTSE 100 as Citi reiterated its 'buy' rating on the stock, saying it "presents a compelling investment opportunity".
Defence firms BAE Systems and Rolls-Royce rallied on news that German conservative leader Friedrich Merz has reached a tentative agreement with the Green party on plans for a 500bn fund for defence and infrastructure spending.
Bakkavor surged as it emerged the food company rejected two bids from UK rival Greencore - the second worth 1.13bn.
Housebuilder Berkeley Group advanced as it reaffirmed earnings guidance but said planned government regulatory changes were putting delivery of new homes under "significant" pressure.
Recruiter Hays surged after Exane BNP Paribas lifted the shares to 'outperform' from 'underperform'.
Ashmore was also sharply higher on the back of a broker note, as UBS upgraded shares of the emerging markets investment manager to 'buy' from 'neutral', saying it expects improving inflows.
On the downside, supermarkets were the worst performers after Asda said it would undertake a "substantive" programme of investment in price, availability and the shopping experience to get the business "firing on all cylinders again", which will "materially" reduce profitability this year.
Tesco, Sainsbury's and Marks & Spencer slumped.
Burberry slid after JPMorgan Cazenove placed the shares on 'negative catalyst watch' into FY25 results on 19 May.
Heat treatment and thermal processing services firm Bodycote lost ground as it delivered a cautious outlook as it presented its full-year results, with end markets remaining mixed after a "challenging" 2024, in which adjusted operating profits grew only 1.1% to 129m.
Builders' merchant Travis Perkins fell as it said results for the year to the end of December 2024 will be delayed as its auditor has requested additional to complete standard audit procedures. Shares in the company also tumbled on Monday after it announced that chief executive Pete Redfern was stepping down with immediate effect due to ill health.
Market Movers
FTSE 100 (UKX) 8,632.33 1.05%
FTSE 250 (MCX) 19,995.59 1.56%
techMARK (TASX) 4,786.83 1.30%
FTSE 100 - Risers
Melrose Industries (MRO) 528.00p 6.41%
BAE Systems (BA.) 1,657.00p 4.18%
Games Workshop Group (GAW) 14,900.00p 3.47%
Rolls-Royce Holdings (RR.) 796.40p 3.24%
Scottish Mortgage Inv Trust (SMT) 967.60p 2.96%
easyJet (EZJ) 486.60p 2.70%
BP (BP.) 429.00p 2.67%
Glencore (GLEN) 320.75p 2.62%
Airtel Africa (AAF) 153.80p 2.60%
Anglo American (AAL) 2,313.00p 2.57%
FTSE 100 - Fallers
Tesco (TSCO) 339.20p -8.69%
Sainsbury (J) (SBRY) 235.00p -7.77%
Marks & Spencer Group (MKS) 334.40p -5.22%
WPP (WPP) 616.20p -2.50%
Spirax Group (SPX) 6,965.00p -2.04%
Reckitt Benckiser Group (RKT) 5,134.00p -1.65%
Convatec Group (CTEC) 254.40p -1.17%
London Stock Exchange Group (LSEG) 10,985.00p -0.90%
Pershing Square Holdings Ltd NPV (PSH) 3,640.00p -0.87%
Diageo (DGE) 2,065.50p -0.82%
FTSE 250 - Risers
Bakkavor Group (BAKK) 176.50p 16.89%
Ferrexpo (FXPO) 83.50p 13.45%
Hays (HAS) 85.10p 12.34%
Great Portland Estates (GPE) 290.50p 9.38%
Ashmore Group (ASHM) 162.40p 8.77%
Pagegroup (PAGE) 340.20p 6.25%
Senior (SNR) 167.20p 5.82%
Ocado Group (OCDO) 238.80p 5.06%
Lion Finance Group (BGEO) 5,630.00p 5.04%
Hochschild Mining (HOC) 234.00p 4.93%
FTSE 250 - Fallers
Burberry Group (BRBY) 948.20p -5.18%
Bodycote (BOY) 601.00p -4.87%
4Imprint Group (FOUR) 3,995.00p -3.27%
Bridgepoint Group (Reg S) (BPT) 326.60p -3.14%
Trainline (TRN) 265.40p -2.57%
Apax Global Alpha Limited (APAX) 122.80p -2.54%
Pollen Street Group Limited (POLN) 726.00p -2.16%
Travis Perkins (TPK) 557.00p -2.01%
Raspberry PI Holdings (RPI) 580.50p -1.61%
Oxford Nanopore Technologies (ONT) 100.90p -1.57%
89.77 (1.05%)
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