Source: Sharecast
At 0830 GMT, the FTSE 100 was down 0.2% at 7,307.48.
Data released earlier by the Office for National Statistics showed the economy barely grew in October as the post-pandemic recovery stalled. GDP grew just 0.1%, coming in weaker than expectations for 0.4% growth and leaving the economy 0.5% below pre-pandemic February 2020 levels.
The small growth in GDP was driven mostly by a rise in face-to-face GP appointments and solid demand for second-hand cars. The services sector expanded by 0.4%, taking it back to pre-pandemic levels for the first time. However, the manufacturing sector was flat and construction fell 1.8% amid a shortage of materials.
Paul Dales, chief UK economist at Capital Economics, said the disappointing rise in GDP in October suggests the economy had slowed to a crawl even before the Omicron Covid-19 variant was discovered in late November.
"Early evidence suggests growth in November might have been a bit better. Nonetheless, at such low rates of growth, the government’s ‘Plan B’ Covid-19 restrictions could be the difference between the economy growing or contracting in December," he said.
Dales estimated that ‘Plan B’ restrictions could reduce GDP by 0.0-0.5% in December. "That means it is touch-and-go whether the economy will grow or contract this month. Against that background, we doubt the Bank of England will raise interest rates next Thursday," he said.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Although a rate rise can’t be completely ruled out next week, most bets are off that the Bank will push them up so soon, given this latest downbeat reading and the fact that the Omicron variant is still an unknown quantity in terms of the extra pressure it will put on the health service.
"A rate rise in February is more likely to be on the table, as the inflation kettle is set to be whistling loudly by then. That is unless restrictions are ramped up dramatically, pushing the economy into an even tighter recovery position."
Looking ahead to the rest of the day, investors will be eyeing the release of the latest US inflation figures at 1330 GMT, which are expected to show a surge to the highest level in nearly 40 years in November.
In equity markets, food packaging business Hilton Food was a touch weaker as it announced an equity placing to help buy smoked salmon producer Dutch Seafood Company as part of an effort to expand its presence in a growing protein category and enter the US.
Elsewhere, Ashmore was under the cosh after a downgrade to ‘neutral’ by Goldman Sachs.
On the upside, Associated British Foods was trading higher after it said Primark trading for the year to date has been ahead of expectations, with improved like-for-like sales compared to the fourth quarter of its last financial year, but warned of increasing Covid cases hitting stores in Europe.
Housebuilder Berkeley Group rallied after price target upgrades at Citigroup, Barclays and JPMorgan.
Market Movers
FTSE 100 (UKX) 7,307.48 -0.19%
FTSE 250 (MCX) 23,069.73 -0.34%
techMARK (TASX) 4,449.78 -0.34%
FTSE 100 - Risers
British American Tobacco (BATS) 2,719.50p 1.06%
Berkeley Group Holdings (The) (BKG) 4,776.00p 0.80%
B&M European Value Retail S.A. (DI) (BME) 649.00p 0.78%
Imperial Brands (IMB) 1,591.00p 0.54%
London Stock Exchange Group (LSEG) 6,676.00p 0.51%
BHP Group (BHP) 2,141.50p 0.42%
Unilever (ULVR) 3,997.00p 0.38%
CRH (CDI) (CRH) 3,823.00p 0.34%
Land Securities Group (LAND) 753.40p 0.32%
Aviva (AV.) 394.50p 0.25%
FTSE 100 - Fallers
Entain (ENT) 1,657.50p -1.54%
Scottish Mortgage Inv Trust (SMT) 1,404.00p -1.30%
Darktrace (DARK) 410.00p -1.06%
Auto Trader Group (AUTO) 729.60p -1.03%
Aveva Group (AVV) 3,277.00p -1.03%
3i Group (III) 1,385.50p -1.00%
Smith & Nephew (SN.) 1,224.50p -0.93%
AstraZeneca (AZN) 8,285.00p -0.92%
Ashtead Group (AHT) 6,270.00p -0.92%
ITV (ITV) 111.10p -0.89%
FTSE 250 - Risers
Elementis (ELM) 141.90p 5.03%
FirstGroup (FGP) 98.00p 2.19%
XP Power Ltd. (DI) (XPP) 5,190.00p 1.57%
TUI AG Reg Shs (DI) (TUI) 228.60p 1.37%
UK Commercial Property Reit Limited (UKCM) 78.00p 1.30%
Dr. Martens (DOCS) 393.40p 0.87%
BH Macro Ltd. GBP Shares (BHMG) 3,730.00p 0.81%
Morgan Sindall Group (MGNS) 2,550.00p 0.79%
Cranswick (CWK) 3,678.00p 0.71%
LXI Reit (LXI) 148.00p 0.68%
FTSE 250 - Fallers
Ashmore Group (ASHM) 276.80p -5.72%
Centamin (DI) (CEY) 84.10p -4.02%
Harbour Energy (HBR) 369.40p -2.69%
Cineworld Group (CINE) 48.72p -2.29%
Blackrock Throgmorton Trust (THRG) 938.00p -2.19%
Future (FUTR) 3,554.00p -1.88%
Network International Holdings (NETW) 271.40p -1.70%
Trustpilot Group (TRST) 338.80p -1.63%
Edinburgh Worldwide Inv Trust (EWI) 308.00p -1.60%
Templeton Emerging Markets Inv Trust (TEM) 180.00p -1.53%