Stocks in London moved higher on Friday, as investors took in stride news of a growth pullback in the country. Deal news sent FTSE 250-listed Vectura climbing.
The FTSE 100 index
rose 0.5% to 7,067.41, with the British pound
up 0.5% to $1.3846. The London stock index fell 1.6% on Thursday, its biggest daily percentage drop since June 18. Friday’s rebound was in step with a recovery seen in European indices and U.S. stocks, which also fell Thursday amid concerns that rising coronavirus cases around the globe will disrupt the global economy recovery.
Economic data showed the U.K. economy slowed in May, after a sharp rise in April as coronavirus restrictions eased. Fueled by services, gross domestic product grew 0.8% on the month, the Office for National Statistics said Friday. April’s growth was revised down to 2% from a prior estimate of 2.3%.
The gains were “led by indoor hospitality, but held back by a global chip shortage hitting car production. The monthly growth rate was below the 1.5% forecast and leaves the economy 3.1% below its February 2020 pre-pandemic size,” said Neil Wilson, chief market analyst for Markets.com, in a note to clients.
Mining stocks drove bulk of Friday’s move higher, with Rio Tinto
Airline stocks were nudging higher a day after the government said fully vaccinated holidaymakers will no longer need to quarantine from amber list countries from July 19. The government is expected to next week announce that most remaining restrictions in the U.K. will be dropped. Shares of easyJet
rose 2.1% and those of Wizz Air
was another big mover, climbing 13% after tobacco giant Philip Morris International
said it has agreed to buy the U.K. pharma company that makes inhaled medicines for respiratory diseases. The deal values the company at £1.05 billion ($1.44 billion).
“There seems to be an element of poacher turned gamekeeper for Philip Morris in this deal as it looks to use its expertise in inhalation for good – making Vectura’s inhaled drug delivery solutions a good fit,” said AJ Bell investment director Russ Mould, in a note to clients.
“Vectura shareholders may be pleased this is an all-cash offer as many might have had ESG objections to being left with a position in a manufacturer of harmful cigarettes as opposed to a business working to improve people’s health,” he said.