FTSE 100 close: London’s blue-chip index closes higher after UK returns to growth while Mobico plunges
London’s FTSE 100 ended a drab Thursday in the green after positive news about the UK economy, which has grown by 0.2 per cent.
The capital’s bluechip index closed 0.32 per cent higher, hitting 7,644.78, after fresh figures from the Office for National Statistics showed a small recovery for the economy in August. The FTSE 250 index, which is more aligned with the UK domestic economy, ended 0.19 per cent lower at 17,842.09.
BP finished the day at the top of the index, rising over three per cent while Shell climbed 1.4 per cent.
The Restaurant Group, which owns chains such as Wagamama, saw its shares rise more than 35 per cent after the open.
The FTSE All-Share-listed firm was up after it revealed the firm is set to become the latest London-listed firm to go private, after receiving a bumper bid from private equity giant Apollo.
The biggest faller was Mobico group, formerly called National Express, whose shares plummeted by 30 per cent after the open, following a miserable trading update.
Its share price tanked this morning after it suspended its full-year dividend and announced plans to sell its North American school bus business.
Markets were also encouraged by GDP figures out this morning, published by the Office for National Statistics, which showed the UK economy grew by 0.2 per cent.
The services sector grew at 0.4 per cent, the main contributor to GDP growth. Consumer facing services however dipped into contraction while the production sector fell by 0.7 per cent in August.
ONS director of economic statistics Darren Morgan said: “Our initial estimate suggests GDP grew a little in August, led by strong growth in services which was partially offset by falls in manufacturing and construction.
“Within services, education returned to normal levels, while computer programmers and engineers both had strong months.
“Across the last three months as a whole, the economy has grown modestly, led by car manufacturing and sales, and construction.”
Following estimates for the UK’s growth in August, investors turned their eyes to US inflation.
Figures from the Bureau of Labor Statistics showed the consumer price index (CPI) rose 0.4 per cent month-on-month in September.
This meant the annual rate of inflation remained stuck at 3.7 per cent. Economists had expected the annual rate of inflation to fall slightly to 3.6 per cent.
“The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase. An increase in the gasoline index was also a major contributor to the all items monthly rise,” the Bureau said.
On Twitter, Mohamed El-Erian said the figures were “a reminder of the challenges of the ‘final mile’ of battling inflation, especially when core service inflation still remains an issue and there is concern about the spillover into core CPI from higher energy prices.”