BUSINESS LIVE: GDP growth beats expectations

Just before close, the FTSE 100 was 1.13% lower at 7,532.37.

Meanwhile, the FTSE 250 was 0.82% lower at 18,837.80.

FC Barcelona has revealed plans to spin off its content creation business in the US via a blank-check merger and an initial public offering.

The Spanish football giant said on Friday that the special purpose acquisition company Mountain & Co had agreed to take its Barca Media arm public on the Nasdaq.

Interactive investor will increase the rate of interest it pays on uninvested cash held in customers’ stocks and shares Isas, SIPPs, and trading accounts.

From 1 September, the DIY investing platform will pay an extra 0.25 per cent on cash balances held in its Isas and an additional 0.5 per cent interest in its SIPPs.

It will also start paying interest on euro balances in SIPPs for the first time, with a blanket rate of 2.75 per cent for all value ranges.

The Co-operative Bank has struck a £464million deal to buy Sainsbury’s Bank’s mortgage portfolio.

The sale follows Sainsbury’s Bank’s announcement in 2019, when it said its banking operation would stop all new mortgage sales and review options for the existing mortgage business.

Sainsbury’s said the sale is a ‘big step’ in helping the firm to simplify its banking business.

Co-op Bank said the acquired portfolio comprises of approximately 3,500 customers with balances of around £479million.

It said that, once the deal is completed, Sainsbury’s Bank customers are set to transfer to the bank over a period of one year to ensure a ‘smooth process’.

Nick Slape, chief executive of Co-op Bank, said:

Once the transfer activity is complete, we look forward to welcoming the new customers who will benefit from our ambitious new technology platform, which will simplify our banking services and will make us more efficient, giving us the flexibility to introduce new products and services.

This transaction, our first portfolio acquisition in more than a decade, further demonstrates the progress we have made in recent years and our strength in what remains a competitive UK mortgage market.

Sainsbury’s reported that the mortgage portfolio had provided around £4 million in profits in the last financial year.

Jim Brown, chief executive of Sainsbury’s Bank, said:

The sale of the mortgage book will support our strategy to reshape our portfolio and focus on offering capital and cost efficient, mobile-led financial services to loyal Sainsbury’s and Argos customers.

Adriatic Metals stood out this week – not for the share price movement, but for the fact it managed to secure a chunk of cash in a well-supported fundraiser.

It netted just over £25million in new investment. That’s no mean feat in the current market, which has been tough for those looking for growth capital.

Starting with the risers, marketing agency Silver Bullet increased its market capitalization by 45 per cent after posting a strong trading update on Thursday.

(PA) – Retailers are being urged to match Tesco’s scienced-based climate targets after the retailer had a landmark goal on reducing greenhouse gas emissions approved.

The UK supermarket has become one of the first companies in the world to set a validated science-based target for slashing emissions originating from forests, land and agriculture.

Its plans to become carbon neutral across its operations by 2035 and across its entire value chain by 2050 have been approved by the Science-Based Targets Initiative (SBTi) – the official global body that defines, promotes and validates the best practice in setting climate targets in line with the Paris Agreement goals of limiting warming to 1.5C.

Tesco’s climate targets cover emissions from its own operations (Scope 1), those from the energy it buys (Scope 2) and those across its entire value chain (Scope 3).

The now independently validated targets include an interim goal of reducing absolute emissions from its own operations by 85%, by 2030, compared to 2015.

They also include pledges to cut absolute Scope 3 emissions from energy and industrial sources, and the landmark target of reducing Scope 3 emissions originating from forest, land and agriculture by 39% by 2032 – both compared to 2019.

A union has warned that Irn-Bru supplies could be disrupted as drivers walk out in a dispute over pay.

Trucker and shunter drivers represented by Unite took strike action on Friday at AG Barr’s production and distribution centre in Cumbernauld, North Lanarkshire.

The Chancellor’s bid to lure high skilled professionals like doctors to keep working appears to be paying off, new research shows.

Two thirds of top earners are considering working for longer and one in five who had retired plans to return to work as a result of pension reforms announced in the Budget, it found.

Cabinet minister Grant Shapps has insisted Britain should be ‘leaning into’ the phase-out of petrol and diesel cars as it will help boost other parts of the UK economy.

The Energy Security and Net Zero Secretary pointed to a recent multi-billion pound investment in Britain’s battery manufacturing industry as a benefit of forcing the move to electric cars.

The new English Premier League season is almost here, kicking off with promoted Burnley versus champions Manchester City this evening.

For many of us, that means picking and submitting our fantasy football team before the deadline.

As the new season looms, are you a tinkerer, set-and-forgetter, data-junkie, value, growth or momentum player? And how well diversified are you?

Commercial property companies’ shares are in the red this morning over fears of what more Bank of England rate hikes could mean for the sector.

Stronger-than-expected UK GDP data suggests the Bank of England could hike rates further to get inflation down.

FTSE 250-listed British Land is down more than 5 per cent, followed by UK Commercial Property REIT, down 3.4 per cent.

FTSE 100-listed Land Securities is also down 1.7 per cent.

The FTSE 100 has dropped 1 per cent to 7544.9, partly affected by a stronger pound, as investors seem concerned that better-than-expected GDP figures will see the Bank of England keep hiking rates.

AJ Bell investment director Russ Mould sums up what’s moving markets this morning:

After another positive surprise on US inflation, stocks were all set to stage another rally before the head of the San Francisco Federal Reserve Bank intervened to dampen hopes of a shift in the trajectory of rates.

That dragged US stocks down from their highs and set the scene for a weak open for European stocks.

The FTSE 100 was also affected by a strong pound, after better-than expected figures on the UK economy, and weak resources stocks after a tough week for China marked by deflation, falling producer prices and soft trade figures as well as a sorry showing for Chinese equities. As the world’s most rapacious consumer of commodities, the fortunes of the Chinese economy are closely tied to these markets.

Later today factory gate prices are out in the US, another reading which suggests inflationary pressures are easing could lift sentiment.

This data set is something of a crystal ball for consumer price inflation; when producers charge more for goods the higher costs are usually passed on to households.

Almost 250,000 passengers travelled through London Heathrow each day last month as Britons sought to escape the rain for sunnier climates.

Over 7.6 million people used Britain’s biggest airport in July, which is still slightly below pre-pandemic levels but a 21.4 per cent rise on the previous year and approximately 620,000 more than in June.

Last year’s figures were significantly affected by the travel hub imposing a departing passenger cap of 100,000 per day in response to staff struggling to cope with an unprecedented recovery in demand.

Wilko collapsed into administration yesterday after failing to find rescue cash – but will continue to trade for now.

The homeware store said it had ‘no choice’ but to call in administrators, leaving 12,000 jobs at risk.

The £1.24billion merger between two firms providing services for the NHS has been provisionally cleared by the UK’s competition watchdog.

The Competition and Markets Authority (CMA) said the acquisition of AIM-listed Emis by US healthcare giant UnitedHealth Group is not expected to harm competition or adversely affect patients.

Emis, which is based in Leeds, provides software and IT services to GP surgeries across the UK, including the electronic patient record system used by the majority of NHS GPs.

The pound has risen against both the dollar and the euro after better-than-expected GDP data raised bets that the Bank of England will continue to hike interest rates.

Sterling has surged by 0.3 per cent, with £1 buying $1.27 and €1.156 on currency markets this morning.

Inflation battle: Prices in America climbed by 3.2% year-on-year in July, a slight rise from the 3% recorded in June but a touch below the 3.3% predicted by economists

The US appeared to have finally brought inflation to heel as prices rose by less than expected last month.

Britain’s June heatwave helped warm up the economy as new figures today showed better-than-expected growth.

The UK economy grew by 0.2 per cent in the second quarter of the year, including a rise of 0.5 per cent in the sixth month, the Office for National Statistics (ONS) said.

It attributed the monthly rise to increases in manufacturing, IT services and a rise in people eating out and drinking more in good weather.

Small business platform Enterprise Nation has launched a new fund in partnership with TikTok, offering grants and mentoring from the country’s top entrepreneurs.

The platform, which supports 800,000 businesses every year, will offer a £5,000 grants to three small businesses every year which focus on community, trust and entrepreneurship.

London-listed stocks are trading lower this morning, pressured by a stronger pound after data showed the UK’s economy surprisingly grew higher-than-expected in the second quarter.

Sterling has broken three straight days of losses, jumping 0.3 per cent to $1.2709, as ONS data showed GDP growth of 0.5 per cent in June.

Miners have dropped 1.1 per cent, leading sectoral declines as metal prices fall.

Disney has revamped the pricing of its video streaming service after the company shed 11.7m customers in three months.

The media giant said that, while standard subscriptions will remain £7.99 a month for viewers in the UK, there will now be a more expensive premium version, priced at £10.99 a month.

Richard Hunter, head of markets at Interactive Investor:

‘The latest release of GDP data shows a UK economy which continues to confound with its resilience, yet where growth is marginal and therefore likely to be thrown off course by a succession of rate rises and potentially more to come.

‘Of itself, the reading is economically positive but by the same token it complicates the decision which the Bank of England now faces in terms of its next interest rate decision, particularly if it chooses to tighten further and potentially incite a recession.’

Asset managers have been told to justify the fees charged on their funds.

The Financial Conduct Authority said a review of fund managers showed that profitability concerns are influencing how much to charge clients.

The rise of passive investing in recent years has spurred competition within the industry, forcing some funds to reduce their fees.

Matt Britzman, equity analyst at Hargreaves Lansdown:

‘The FTSE100 looks set to open lower today, quickly giving up gains seen in yesterday’s session despite fresh GDP data that shows the UK economy didn’t flatline over the second quarter as some economists had predicted.

‘We’ve got June to thank for the better-than-expected result, where growth of 0.5% pulled up the quarter after a small decline in May. These numbers push the chance of a recession further down the line, but the UK economy looks firmly stuck in a low growth cycle, and with further interest rate hikes firmly priced in by the markets – there doesn’t look to be an immediate path out.

‘UK investors look to have taken June’s positive inflation print as a sign of hope, and today’s GDP read should add to that, with scores for both economic growth and investor confidence rising in early August after three months of consecutive declines. But there’s no escaping the fact the UK’s inflation performance sticks out like a sore thumb compared to other global economies, and investors should strap in for further rate hikes.

‘There are further glimmers of hope from the mortgage market, where several key lenders have lowered rates on a range of fixed-term mortgages. Let’s not get ahead of ourselves though, anyone looking to buy a first home, remortgage or move house right now is still facing some pretty gruesome looking numbers, and next week’s CPI print has a lot riding on it.’

Chief economist at the Institute of Directors Kitty Ussher:

‘This is an encouraging set of data showing an economy performing strongly in June.

‘There was decent growth in both retail and manufacturing, helped by a positive rebound effect from the previous month when activity had been reduced due to the extra bank holiday for the King’s Coronation.

‘Looking across the full three months of the second quarter, we also see economic growth picking up compared to earlier in the year, although today’s initial estimates are subject to revision. In particular, car production has benefited from falling input prices, and consumer demand has also proved resilient, helped by decent weather in June.

‘However the quarterly data also shows a worrying decline in business investment in ICT and machinery following the expiring of the government’s super-deduction allowance at the end of March. It also shows falls in expenditure on scientific R&D, advertising and market research, which could be an early indicator of difficulties ahead.’

The British economy grew faster than expected in June, with firms citing the extra May bank holiday as a driver of output, Office for National Statistics data shows.

GDP growth came in at 0.5 per cent for the month, surpassing expectations of 0.2 per cent, while growth for the second quarter overall was 0.2 per cent.

‘The actions we’re taking to fight inflation are starting to take effect, which means we are laying the strong foundations needed to grow the economy,’ Chancellor Jeremy Hunt said.