UK stocks fall after GDP data; Diageo tumbles to near 3-year low

Reuters

Published Nov 10, 2023 08:29

Updated Nov 10, 2023 17:10

By Khushi Singh and Johann M Cherian

(Reuters) -London stocks sagged on Friday, with beverage maker Diageo (LON:DGE) weighing on the FTSE 100 after delivering a grim forecast, while economic data signalling that the British economy failed to grow in the third quarter further clouded risk sentiment.

Diageo sank 12.2% to a near-three year low after the Johnnie Walker whisky maker said it expected first-half operating profit growth to drop due to "materially weaker performance" in Latin America and the Caribbean.

The beverages index tanked 11.3%, its worst day since October 1987.

Broadly, the benchmark FTSE 100 slid 1.3%, while the mid-cap FTSE 250 dropped 1.0%.

Adding to the gloom, data showed Britain's stagnating economy failed to grow in the July-to-September period - but at least managed to avoid the start of a recession.

"Real income squeeze has eased relative to last winter," Chris Hare, senior economist at HSBC (LON:HSBA) global research wrote in a note. "If that trend continues, particularly against a softy global backdrop, it raises a question as to where growth is going to come from over the medium term."

Still, Goldman Sachs (NYSE:GS) raised the country's gross domestic product (GDP) growth forecast for the year to 0.6%, from a previous expectation of 0.5%.

UK equities were relatively range-bound throughout the week as investors awaited data to assess domestic economic performance, following a recent skip in monetary tightening by the Bank of England.

The FTSE 100 notched a loss of 0.8% for the week, while the mid-cap index ended the week 0.9% lower.

During early trade on Friday, all FTSE Russell indexes were hit by a technical issue that prevented them being published for forty minutes, index provider parent LSEG said.

Market analysts said it was only index calculations that were affected, while stocks traded normally.