LONDON, June 12 — London stocks edged higher in choppy trading today, as battered cyclical shares gained, although there was some caution among investors after data showed the UK economy shrank the most on record in April.
A tight lockdown to contain the spread of Covid-19 shrunk Britain’s economy by 20.4 per cent in April from March and 24.5 per cent from a year ago, data showed. Both the readings were below the already weak forecasts in a Reuters poll of economists.
“This is a record figure for a monthly fall, and showed weakness across all sectors,” said Emma Wall, head of investment analysis at Hargreaves Lansdown.
“The UK will be keeping an eye on other countries who are a few months ahead of us in the development of the virus, and those who have started to lift restrictions already to see how successful they have been.”
Cyclical stocks including banks, insurers and oil & gas, at the centre of the previous session’s sell-off, led gains in early trading.
The benchmark FTSE 100 index rose 0.7 per cent and the domestically focused mid-cap index 0.9 per cent. While the indexes were set to snap a four-session decline, they were on track to record their worst weekly drop in about three months.
Worries about a second wave of infections in the United States after the pace of growth in new cases picked up added to the cautious sentiment.
“Based on Thursday’s heavy sell-off, investors are going to be much more careful now and are keeping a keen eye on how the second wave of coronavirus infections pans out,” said Michael Baker, market analyst at ETX Capital.
Among shares, Games Workshop Group jumped 10.6 per cent after the fantasy miniatures maker raised its full-year sales forecast.
Technology company IQE surged 19 per cent after forecasting a 27 per cent jump in half-yearly revenue and said it expects to return to profitability. — Reuters
