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London stocks slip after glum GDP data, end with second week of gains

By Reuters

By Bansari Mayur Kamdar

-UK’s FTSE 100 and mid caps indexes slipped for a third straight session on Friday after data pointed to stalling economic growth in Britain, even before the emergence of the Omicron coronavirus variant, but ended their second week in the black.

The benchmark FTSE 100 index eased 0.4% pressured by the healthcare sector after heavyweight drugmaker AstraZeneca fell 2.0% after Berenberg cut its price target on the stock.

The main index clocked its biggest weekly gain in eight months, boosted by a strong recovery in mining stocks.

“We’re seeing a flight to safety with defensive names like British American Tobacco on the front foot,” said Justin McQueen, market analyst at DailyFX.

“The sort of news around Omicron and the government announcing its plan B and suggestions around plan C does put the final nail in the coffin for a rate rise next week.”

Data showed Britain’s economy grew by a weaker-than-expected 0.1% in October, leaving it 0.5% smaller than it was in February 2020, just before the country went into its first COVID-19 lockdown.

“The big drop in people visiting pubs, bars and restaurants doesn’t bode well for the idea that we’re all rediscovering our freedom post-lockdown. Perhaps this catalyst has now played out and people are yearning for the warmth of their home during the autumn and winter instead,” said Russ Mould, investment director at AJ Bell.

The domestically focussed mid-cap index fell 0.9%, after Ashmore Group dropped 2.7% as Goldman Sachs downgraded the asset manager to “neutral”.

The numbers further raised doubts about a December rate hike after Prime Minister Boris Johnson this week announced new coronavirus guidelines ordering people to work from home, wear masks in public places and use vaccine passes for bit public events.

Capping losses on the main index, miners gained 0.7% tracking copper prices, and defensive stocks such as consumer staples, which tend to be less sensitive to the economic climate, also rose. [MET/L]

British American Tobacco gained nearly 2.5% after a Wall Street Journal report that said the U.S. Senate was dropping a proposal to impose higher taxes on vaping, oral nicotine and other NGPs.