European stocks opened the market mute on Wednesday. UK’s FTSE 100 index slipped after weak GDP data for Quarter 1 2021. Other European indices such as Germany’s DAX index, Euro STOXX 50, and French CAC 40 index also edged lower.
UK GDP Data
UK’s FTSE 100 index inched lower on Wednesday after uneven GDP data. UK Gross Domestic Product slipped 1.6% in the first quarter of 2021. This was weaker than the estimated forecast of a 1.5% decline. With the tightening of lockdown restrictions in the first quarter, there was a slowdown in the economic recovery.
The UK GDP level is currently 8.8% below the pre-pandemic levels in the last quarter of 2019. Compared with the same quarter a year ago, the UK economy slipped 6.1%.
Nominal GDP fell by 0.2% in Quarter 1 2021 while the implied deflator went up 1.4%. Compared with the same quarter a year ago, the implied GDP deflator spiked 4.8%. This was boosted by an increase in the implied price change of government consumption.
Government consumption increased in the first quarter. Household consumption expenditure and gross capital formation took a nosedive due to the reintroduction of lockdown restrictions. Trade contracted in the quarter with declines in both imports and exports of goods and services.
The household saving ratio was hovering near the highest level in Quarter 1. It jumped to 19.9% which was the second highest on record.
UK recorded contractions in production and services output while construction output grew over the quarter. The biggest drags in the output sector were education, retail and wholesale trade, and accommodation and food services industries.
Global markets are looking ahead to US labor market data. They are hoping to get clues on whether the Federal Reserve will consider tapering its monetary policies earlier than anticipated.
FTSE 100 Performers
Flutter Entertainment was the best performer in the FTSE 100 index. The bookmaking holding company gained 1.79% in its stock earnings. A few weeks ago, the company announced a new workforce engagement committee.
ITV plc and Ocado Group plc were also among the top performers in the index. Each gained 1.04% and 0.9% respectively.
International Consolidated Airlines Group SA led the drags in the index. The multinational airline holding company lost 2.05% in its stock earnings. Other laggards include Rolls Royce Holdings plc and Whitbread plc. Each declined by more than 1%.