GDP figures weigh on UK domestic stocks but fail to knock the FTSE off course

“The FTSE 100 was flat at 6,529, putting it on track to end the week only a fraction ahead. Bottling company Coca-Cola HBC was one of the stars of the show for the second day in a row as investors liked its optimistic outlook and dividend hike,” says Russ Mould, Investment Director at AJ Bell.

“Some of the top performers over the past week have been in the mining sector, including Anglo American up 6.5%, as investors take a view that commodities will be in greater demand this year. Ocado got the wooden spoon after negative analyst comment and investor disappointment at investment plans caused the shares to fall nearly 9% on the week.

“New figures from the ONS showed the extend of the damage on the UK economy in 2020 from coronavirus, causing many UK-focused companies to fall on the market on Friday despite these figures being backwards-looking. Retailer Next fell 1.6%, banking group Natwest retreated 1.4% and trainers-to-tracksuits seller JD Sports dipped 1.2%.

“The UK economy shrank by 9.9% in 2020 but there was an improvement at the end of the year. The economy grew by a better than expected 1.2% in December, after shrinking by 2.3% in November, as some restrictions eased. The new lockdown that started at the end of December and is still ongoing will no doubt have caused the economy to wobble again.

“However, many households will have saved a significant amount of money during the past year and so there could be a big spending spree when restrictions are eventually lifted.

“Investors continue to show strong support for certain businesses affected by the pandemic, in the belief that their recovery could be very strong. Airline Jet2 reported ‘significant’ demand for its latest fundraising, where it raised £422 million to help see it through the crisis.

“While those taking part in the Jet2 share placing got the stock in a 9%-off sale, there is still a leap of faith in backing a business whose near-term prospects are clouded by uncertainty caused by travel restrictions.”

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