London pre-open: Stocks seen up as UK economy no longer in recession

(Sharecast News) - London stocks were set to rise at the open on Friday as investors mulled the latest UK GDP figures. The FTSE 100 was called to open around 30 points higher.

Data released earlier by the Office for National Statistics showed the UK economy is no longer in recession.

GDP grew by 0.6% in the first quarter of this year, ahead of expectations for 0.4% growth. This means the UK is no longer in recession following two consecutive quarters of contraction at the end of last year, when GDP shrank by 0.1% in the third quarter and 0.3% in the fourth.

Chancellor Jeremy Hunt said: "There is no doubt it has been a difficult few years, but today's growth figures are proof that the economy is returning to full health for the first time since the pandemic.

"We're growing this year and have the best outlook among European G7 countries over the next six years, with wages growing faster than inflation, energy prices falling and tax cuts worth £900 to the average worker hitting bank accounts."

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The 0.6% q/q rise in GDP in Q1 confirmed that the recession ended at the start of this year and lends support to our view that the recovery will be stronger than most forecasters anticipate.

"Even so, at this stage we doubt the recovery will be strong enough to prevent inflation from falling further and the Bank from cutting rates to 3.00% next year."

In corporate news, British Airways owner IAG said it was "well positioned" for the summer after posting a huge rise in first-quarter profit on the back of strong leisure travel demand, especially over the Easter holidays.

Operating profit before exceptional items in the three months to March 31 surged to €68m from €9m a year earlier. Passenger capacity grew 7% over the period.

"Our transformation initiatives and increased demand, including over the Easter holidays, have delivered another very good set of results with improvements to both revenue and operating profit," said chief executive Luis Gallego.

"Investment across the group in transformation is delivering encouraging improvements in punctuality and customer experience at our airlines. IAG Loyalty continues to perform very well. "We are well-positioned for the summer. The high demand for travel is a continuing trend."

Passenger revenue per available seat kilometre was 4.4% higher year on year, through the benefit of the timing of Easter and a continued strong leisure traffic recovery, with business traffic recovering more slowly.

IAG also owns Aer Lingus, Iberia and Vueling.

Property portal Rightmove reiterated its revenue and profit guidance for the full year, but upgraded its customer growth expectations after a strong start to the year.

The company now expects customer numbers to grow by up to 2% over 2024, compared with previous guidance of a slight decrease. However, the average revenue per advertiser (ARPA) growth forecast has been cut to £75-85 from last year's £1,431, down from prior expectations of a £100-110 increase, due to strong growth lettings-only estate agency customers, who typically have a lower ARPA.