Sluggish UK Growth Dampens FTSE 100 Momentum

The FTSE 100 fell 0.3% on Monday after data confirmed only minimal UK economic growth last quarter. Consumer staples and beverage stocks faced significant losses, while gold miners gained. Despite these fluctuations, the FTSE 100 is expected to have its best year since 2009, driven by defensive sectors.

The FTSE 100 experienced a downturn of 0.3% on Monday, breaking a three-day streak of gains, following the release of data highlighting sluggish economic growth in the UK during the third quarter.

The midcap FTSE 250, however, managed a slight recovery, closing up 0.1%, close to its seven-week high. The GDP growth figures pointed to just 0.1% expansion, aligning with projections, though earlier figures for April to June were downgraded from 0.3% to 0.2%. The data indicate that economic activity is being hindered by increased taxes and persistent inflation, despite a rise in household spending.

In addition, Finance Minister Rachel Reeves requested an interim economic forecast from the Office for Budget Responsibility, scheduled for March 3. Beverage stocks within consumer staples suffered, with Diageo dropping 3.6% after Bernstein adjusted its price target. Gold miners, conversely, saw gains as gold prices surged.

(With inputs from agencies.)