UK GDP growth nudges up to 0.3pc; diesel drivers to face increasing taxes

Buoyed by more impressive earnings, US indices have risen to fresh all-time highs this afternoon as its European counterparts have faded.

The FTSE 100 has nudged up on yesterday's gains with ITV finishing the top riser after reporting its second-quarter results and Paddy Power Betfair lagging most after UBS initiated the stock with a "sell" rating.

The currency markets have been fairly quiet today with the pound edging up against the dollar to just under $1.3050.

Sterling had a muted reaction to the ONS' preliminary second quarter GDP growth data, which showed that the economy expanded by 0.3pc, as the figure fell in line with market expectations.

Sterling could move a little more this evening when the Federal Reserve releases the verdict from its latest policy meeting.

IG analyst Joshua Mahony commented:

"This afternoon sees investors focus on the latest appearance from Yellen and co, at what promises to be a relatively uneventful meeting by historical standards.

"With the Fed Funds rate showing a 0% chance of a rate rise, and little chance of a balance sheet reduction being announced today, it is the linguistics which really matter.

"With no press conference from Yellen to contend with, markets will be keeping a close eye out for any mention within the accompanying statement of a potential September balance sheet reduction, alongside any reference to recent inflation disappointment."

Commodities giant Noble Group has outlined a sweeping restructuring plan as it warned investors to brace for a $1.8bn (£1.38bn) loss in its second quarter.

Singapore-listed Noble, which ships raw materials such as oil, gas, metals and minerals to high-growth markets in Asia and the Middle East, will sell off its US gas and power business to its rival, Swiss trading house Mercuria, for $248m. It will also team up with Mercuria to “explore strategic alliances in Asia”.

Noble also revealed plans to offload its oil liquids business, raise up to $1bn from selling other North American assets, and slash its headcount from 900 to 400 in a bid to save cash.

The restructuring comes as Noble warned it would make a net loss of up to $1.8bn in the three months to June 30, driven by huge one-off writedowns totalling $1.3bn. It posted a loss of $130m in the first quarter.

Read Jon Yeomans' full report here

The price of Brent crude has stabilised at $50.60 per barrel this afternoon after the US Energy Information Administration said that crude inventories fell by 7.2m barrels last week, confirming similarly strong data from the American Petroleum Institute yesterday.

All the mid-cap oil stocks have been boosted by the price rally with Tullow Oil leading the gainers on the FTSE 250 despite reporting a pre-tax loss of almost £400m.

European markets' momentum has tailed off this afternoon as the major US indices hit record highs.

CMC Markets analyst David Madden commented that it's "a bit concerning" to see stocks run riot across the pond while becoming more subdued here in Europe.

He added:

"The FTSE 100 has been range bound for July as traders can’t seem to make their mind up either way. Some hawkish comments from Bank of England (BoE) members in recent weeks has shaken the London benchmark, and a push higher in the pound has made matters worse.

"Next month’s BoE meeting could lean back to the dovish side as notable hawk Kristen Forbes has left. Adding to that, the most recent CPI and GDP numbers from the UK could temper the hawk’s views."    

I'll just warn that his analysis of ITV's strong share price rally today does contain Love Island for those avoiding it at all costs:

"ITV shares are higher on the session after the company reported that it gained a larger slice of TV viewing time in the past six months. The TV show Love Island proved to very popular with viewers, and there is to be a second series of the show, and the TV channel will be more attractive for advertising slots.

 "The firm increased its interim-dividend and this kept shareholders onside."

Buoyant passenger growth at regional airline Flybe alongside evidence it finally has control over the number of seats it offers has helped its shares rocket.

The Exeter-based airline saw investors push its share price up more than 12pc to 40p suggesting growing confidence in recently-installed chief executive Christine Ourmieres-Widener.

Sales leaped nearly 12pc to £174m for the three months to June 30 thanks to a 7pc rise in passenger numbers to 2.4m.

Crucially, its revenue per seat - a key industry performance metric - jumped nearly 8pc to £51.73, which provides some proof the carrier is beyond its historic overcapacity problems.

Read Bradley Gerrard's full article here

The latest batch of strong earnings in the US has lifted investor sentiment on Wall Street again with the Dow Jones gaining another 0.5pc to hit a fresh all-time high.  

Aircraft manufacturer Boeing has gained 6.7pc after raising its profit forecast for the year and Verizon has been lifted around 1pc after Citigroup said that Comcast should acquire the telecom conglomerate.

The shine has come off the FTSE 100 a little this afternoon, the index paring some of the gains it built up this morning. 

ITV is still leading the index, having soothed investor concerns over declining ad revenue by maintaining its forecast for the year, but Anglo American is catching up. The miner has advanced nearly 2pc again today after its South African subsidiary reinstated its interim dividend yesterday to lift hopes that Anglo will do the same.

The London Evening Standard  has reported that Shire is the subject of takeover talk but Ayondo Markets chief trader Jordan Hiscott believes that management will fight any 'low ball' offer:

"With an impressive pipeline of potential blockbuster drugs revealed for Shire, it’s no surprise there are rumours of a takeover yet again. My main issue with this is valuation, when as little as two weeks ago the outgoing Chief Executive, Flemming Ornskov, commented that the market was pricing the pharmaceutical giant too negatively. The stock has not been performing well since Shire agreed to be acquired by AbbVie for 5300p per share, and today’s increase to 4300p still remains 1540p from their all-time high.

"It’s also important to bear in mind that the deal was terminated by the Obama administration due to the plethora of tax inversion deals taking place over the same period.  

“With this in mind for any notion of a ‘low ball offer’ from any potential suitor is likely to be dealt with quickly by Shire, who I expect will fight any takeover aggressively unless there is a significant premium to AbbVie’s previously agreed level.”

 

Emma Walmsley has laid out plans to overhaul GSK into a leaner business with “more edge” that fast-tracks the development of blockbuster drugs and prioritises growth in the US, in her first set of interim results as chief executive.

As part of a new £1bn cost-cutting programme, the FTSE 100 firm will ditch 30 commercially unattractive drug development programmes and consider the sale of its rare diseases business.

Instead Ms Walmsley wants GSK to plough four fifths of its R&D cash into “priority” therapies with more profit potential in respiratory, HIV and its fledgling fields of oncology and immuno-inflammation.

She said: “Pharma should be the first priority. It’s about putting science very much at the core of our business and prioritising the strengthening of the pharma pipeline.”

Shares have dropped 1.4pc to £15.65 today.

Read Iain Withers' full report here

Lower oil prices pushed Tullow Oil into a pre-tax loss of almost £400m in the first half of the year.

The slump in oil prices meant that Tullow was forced to stomach an impairment of property, plant and equipment of $642m (£493m) in the first half of 2017.

After posting pre-tax profits of $24m in the same period last year, Tullow has now revealed losses of $519m.

The swing came despite a 46pc rise in revenues, from $541m to $788m.

Earlier this year the Africa-focused oil explorer turned to shareholders to raise $750m through a rights issue as it looked to manage its debt.

Shares have risen 7pc to 164.3p in today's session.

Read Sam Dean's full report here

With Caterpillar and McDonalds' earnings lifting investor sentiment in New York last night, we'll find out if Coca-Cola beating Wall Street estimates and Boeing raising its profit forecast this afternoon will boost the US indices higher.

Social networking giant Facebook will share its second quarter earnings after the closing bell tonight with a recent surge in its share price showing that expectation is high among investors.

David Madden, analyst at CMC Markets, provided this preview:

"Expectations for growth have ramped up dramatically, but at the same time, valuations have been supported by fundamentals.

"This time around, Facebook is expected to report adjusted earning per share of $1.39 and sales of $9.2bn. If achieved, these levels would represent growth of 43% over year.

"The chief financial officer, David Wehner, cautioned the market by saying that ad load may ‘come down meaningfully’ after the middle of 2017. Traders will be keeping an eye for forecasts in relation to ads for the remainder of the year."

Student accommodation provider Unite has said it expects to spend up to £2m replacing cladding on some of its blocks after the Grenfell Tower fire.

Six of the firm’s buildings have been flagged as having cladding that concerned fire officials, although Unite said all have been inspected and have been deemed safe to inhabit.

Richard Smith, Unite’s chief executive, said he took the safety of the company’s residents “extremely seriously”.

“We need to await the outcome of fire tests, which we should have in one-to-two weeks,” he said. If all the buildings need to have cladding removed, it is expected to cost the company up to £2m, along with between £500,000 and £1.5m in lost earnings while the 600 bedrooms affected are unoccupied.

Read Rhiannon Bury's full report here

A lack of low-cost long-range electric vehicles, battery metal cost inflation if adoption is too rapid and electricity infrastructure limitations are likely to hold back the prominence of electric cars in the UK in the next 10 years, said Liberum following the Government's announcement that petrol and diesel cars will be banned from 2040.

Its analyst Adam Collins added that mass adoption will "require a major rollout of commercial fast charging points and investment in upgraded grid substations".

ETF Securities head of research and investment strategy James Butterfill is also less optimistic on the proposals:

"We remain sceptical that the UK plan to ban the sale of new petrol and diesel cars by 2040 will be achieved.

"Currently the electricity grid does not have the required capacity to accommodate this change. According to the Green Alliance most residential streets do not have capacity for more than 6 cars to be charged at any time and as such would require significant infrastructure upgrades.  

"Affordability also remains an obstacle. The average cost of a car is US$24,000, with the cheapest electric car being $33,000, therefore despite the falling costs it still has a long way to go before it can properly compete with internal combustion cars.”

At least John is looking on the bright side:

Mike Ashley, the Newcastle United owner and Sports Direct boss, has won a High Court battle with an investment banker over a £15 million deal allegedly made in a London pub.

The case revolved on an evening of "heavy drinking" in 2013 where Jeffrey Blue, a former investment banker, claimed that the billionaire agreed to pay him £15m if he helped Sports Direct's  shares to rise from £4 to £8.

A judge this morning dismissed the £15m claim after declaring that an agreement was "not a serious discussion...but was banter in which Mr Ashley was displaying his wealth and scale of ambitions".

Mr Justice Leggatt said that the "jocular" remark by Mr Ashley that he would pay Mr Blue  was not a contract and "that there was no one present in the Horse & Groom pub who thought that it was genuine...they all thought that it was a joke."

The judge said in summary "the fact that Mr Blue has since convinced himself that the offer was a serious one, and that a legally binding agreement was made, shows only that the human capacity for wishful thinking knows few bounds.

Read Ashley Armstrong's full report here

Investor focus this afternoon will start to turn to the conclusion of the Federal Reserve's latest's policy meeting (7pm). A rate hike is off the table but the markets will be looking for any clues on when the central bank will start to unwind its balance sheet.

London Capital Group analyst Ipek Ozkardeskaya explained:

"Markets are fixated to details regarding the Fed’s balance sheet normalisation plans. The majority of investors consented that September would be a suitable time for the Fed to start unwinding its portfolio by letting assets mature without rolling them over.

"The latter option would allow the Fed to gradually reduce the size of its $4.47 billion balance sheet and would be equal to an approximately 25 basis points tightening on rates."

RBC Global Asset Management chief economist Eric Lascelles commented that we shouldn't expect fireworks this time but that the markets shouldn't rule out a September hike.

He added:

"The Fed set off fireworks in June with a fourth rate hike, but is unlikely to follow that up with more action in the coming week. It would be very aggressive to raise rates at two consecutive meetings.

"The overall economic backdrop seems similar to six weeks ago, with a weaker U.S. dollar providing a slightly hawkish tilt (more growth, more inflation). The key debate concerns whether the Fed will raise rates in September, use that opportunity to articulate a clear starting point for balance sheet reduction, or both. We are inclined to think “both” at this juncture.”

Chancellor Philip Hammond has reacted to the ONS' latest figures which show that the UK economy grew by 0.3pc in the second quarter of the year, a slightly pick-up from 0.2pc in the first quarter. He said that growth is steady but more can be done on productivity.

Labour shadow chancellor John McDonnell has also provided his reaction:

"Today’s GDP figures reveal weak growth under a weak government, and expose the last seven years of Tory economic failure.

“Growth for the first half of 2017 is below expectations, and it follows continued data showing working families are being squeezed with wages not keeping up with prices.

“The truth is that the Tories’ austerity cuts have undermined working people’s living standards and weakened the UK economy."

The chief executive and co-founder of premium drinks brand Fever-Tree is almost £30m richer this morning after cashing in on 1.5m shares in the rapidly growing company.

Tim Warrillow’s decision to sell part of his stake comes a day after Fever-Tree’s share price soared by a further 20pc following yet another upgrade to its profit forecasts.

The company, which sells posh tonic water, has consistently smashed expectations and its share price is now 15 times higher than when it floated in late 2014.

Mr Warrillow’s decision to offload 1.5m shares, for £28.9m, reduces his stake in Fever-Tree to 5.4pc.

Shares have risen a further 130p, or 6.3pc, to £21.88 today. 

Read Sam Dean's full report here

Britain’s economy grew by 0.3pc in the three months to June as retail spending increased and the film industry thrived, boosting the services sector and adding a little extra momentum to the sluggish GDP figures.

The figure compares with growth of 0.2pc in the first quarter of the year and represents the weakest start to any year since 2012.

The UK’s dominant services sector grew by 0.5pc, the Office for National Statistics (ONS) said, accelerating from its disappointing 0.1pc expansion in the previous quarter.

But manufacturing output fell by 0.5pc despite hopes that the weaker pound would boost exports.

Construction output also plunged by 0.9pc.

“The economy has experienced a notable slowdown in the first half of this year,” said Darren Morgan, the ONS’s head of national accounts.

Read Tim Wallace's full report here

A weaker pound has lifted the heavyweight defensive stocks on the FTSE 100, according to Accendo Markets head of research Mike Van Dulken, with British American Tobacco, Unilever and Diageo supporting the index this morning.

The blue-chip index could pare some of its gains this afternoon, however, as the pound has advanced against the dollar and euro in the last hour, trading at $1.3050 against the greenback. The currency markets gave a muted reaction to the ONS reporting that the UK economy grew by 0.3pc in the second quarter, the slight pick-up being in line with market expectations.

GlaxoSmithKline has edged down 1.2pc after lowering its 2017 earnings guidance late this morning while ITV has leapt to the top of the leaderboard after maintaining its full-year guidance despite a decline in advert revenue.

On the FTSE 250, Acacia Mining has shed another 6.8pc following a ratings downgrade from Credit Suisse while specialist lender Paragon has risen 5.7pc after posting a strong performance in its buy-to-let division, bucking the market trend.

Mr Van Dulken added on today's movements in London:

"Equities are holding this morning's gains, seemingly confident that this evening's Fed statement won't offer up anything to derail bullish sentiment from earnings season, supported by a China-inspired copper rally and oil's rebound on hopes of Saudi/Russia export cuts."

Here's the current state of play in Europe: 

FTSE 100: +0.45pc

DAX: +0.37pc

CAC 40: +0.76pc

IBEX: +0.51pc

Food and support services group Compass enjoyed revenue growth of almost 4pc as it is business soared in North America and it took a substantial boost from the weaker pound.

Compass, which earns most of its money abroad, said exchange rates would provide an added £2.2bn in revenues, and £174m in underlying operating profit, if the pound remains weak.

The FTSE 100 contractor, which caters for the Wimbledon tennis championships, said revenues rose 3.9pc in the third quarter.

Revenues grew 7.1pc in its North American business, offsetting a decline of 1.3pc in the rest of the world.

Shares have advanced 35p, or 2.2pc, to £16.34 this morning.

Read Sam Dean's full report here

Today's figures, which if later confirmed will make the first half of 2017 the weakest in five years, show that confidence in traditionally strong sectors has been hit, according to Steve Allen, chairman of the British American Business Council.

He argued that Brexit uncertainty is impacting the figures: 

"Confidence is clearly down in traditionally strong sectors including manufacturing and construction, driven no doubt, by uncertainty around Brexit. 

"Slow growth in these traditionally well performing sectors is also due, in part, to many firms sitting on their hands and shying away from making investment decisions until there is some clarity on future trade relations with the EU, our biggest trading partner. They must now take action and explore options elsewhere, including the US and Far East, where appetite is increasing and more opportunities are emerging." 

Brexit is, of course, the hot topic regarding the GDP figures and Twitter has reacted in its usual measured way...

ITV profits sank 16pc in the first half of the year as advertisers curbed spending in response to political and economic tremors and it spent more on making big-budget dramas.

The broadcaster sought to reassure investors about its underlying strength by increasing its interim dividend 5pc despite the tough market conditions.

This had the intended effect, as ITV shares were up more than 2.5pc in early trading.

Most of the fall in pre-tax profits to £259m was accounted for by an 8pc decline in advertising sales, which ITV blamed on uncertainties related to Brexit and the General Election, insisting that television remains a “robust” market despite some spending and viewing shifting online.

Read Christopher Williams' full report here

With the UK government following the French example to ban all petrol and diesel cars from 2040, investors will be questioning what the impact on oil demand will be and whether it could peak earlier than expected.

On Monday, Goldman Sachs said that peak oil demand could come as soon as 2024 as the prevalence of electric vehicles increases, echoing energy giant Shell's prediction that demand could peak as soon as in five year's time.

Barclays oil and gas equity research analyst Lydia Rainforth said this on how the electric car market will change:

"It is clear that the future of the car is evolving rapidly.

"Increased availability, more favourable regulation, longer battery lives, falling charging times and costs all contribute to a picture that is set to see the proportion of electric vehicles (EVs) in the production mix of auto manufacturers grow exponentially over the coming two decades, in our view."

Today traders are reacting on a more short-term basis.

Brent crude has stabilised around the $50.50 per barrel mark after pledges made in OPEC's meeting on Monday and the latest American Petroleum Institute data, which showed a far sharper drawdown in US oil stocks than expected, helped the price rally.

Nomura analyst George Buckley has argued that the latest GDP figures haven't completely killed off the prospect of an interest rate hike at the Bank of England MPC meeting next week.

He commented that as the figures are in line with the central bank's expectations "a 10pc chance of a rate hike is not sufficiently high to reflect the risks of a move in policy rates next week".

Mr Buckley cautioned on today's figures:

"The first estimate of GDP contains relatively little information. Not only do we only receive data on the output (as opposed to the expenditure or income) side of the economy, but just 40% of the data that is required for the ONS to put together a ‘full’ estimate of GDP is available at the time of the first estimate. 

"As a result, we should – as the Bank of England does – take today’s figures with a pinch of salt." 

Briefly away from the fresh GDP data, the FTSE 100 is performing strongly for a second consecutive day but it not not quite seeing the gains it did yesterday.

The pound has given the index a helping hand this morning by drifting lower towards the $1.30 mark. There was a drop following the ONS release but the fall might look a little more dramatic on the chart than reality as sterling rallied prior to the release.

ITV is the top gainer on the FTSE 100 this morning despite reporting a 8pc fall in advertising revenue. The broadcaster has soothed investor concerns by maintaining its financial guidance for the year, it shares advancing 3pc. 

Software company Sage has fallen 3.2pc after Investec said that its acquisition of US software provider Intacct was "expensive" and engineering firm GKN has slipped 1.2pc after confirming the closure of its pension scheme.

Market analyst at IG Joshua Mahony has provided this preview of this afternoon's markets action in the US:

"Today is likely to be dominated by proceedings at the Federal Reserve, with Janet Yellen due to declare the latest monetary policy decision this evening.

"Market expectations of a rate rise are near enough non-existent and thus the focus will be upon the potential for unwinding of the Fed’s oversized balance sheet. As ever, markets are likely to be somewhat hesitant ahead of such a major risk event and as such consolidation is likely to be the order of the day in markets that are highly US centric."

Pantheon Macro's UK economist Samuel Tombs is far more pessimistic on the outlook, however, saying that he doubts the economy can regain momentum in the second half of the year.

The bright spot in the data, the strong showing from the retail sector, could turn in the second half as retailers stop protecting consumers from inflation, according to Mr Tombs.

He commented:

"Retailers haven’t fully passed on higher import prices to consumers yet, so the squeeze on real wages has further to run.

"Meanwhile, firms likely will continue to stockpile cash instead of investing while the outcome of Brexit negotiations remains uncertain. Hopes of a trade boost also will continue to go unfulfilled, since price rises by exporters have meant that their competitiveness has improved only marginally."

As Capital Economics UK economist Paul Hollingsworth points out, today's preliminary estimate is only based on 45pc of the final data so the figure could be revised.

He is rather bullish on prospects for the third quarter:

"But even if it isn’t [revised], yesterday’s CBI Industrial Trends Survey suggests that the manufacturing sector should perform better in Q3.

As a result, we think there is scope for a further pick-up in growth in the second half of this year. Nonetheless, given that today’s outturn was weaker than the MPC’s estimate of 0.4%, this provides support to our view that the MPC will hold off from raising interest rates until around the middle of next year."

The CBI's Industrial Trends Survey showed that factory output increased at its fastest pace since 1995 with optimism on exports for the next three months rising to its highest in four decades.

Here's some more reaction to the GDP growth figures, starting with chief investment officer at Close Brothers Nancy Curtin:

"The UK’s economy is a long-way from grinding to a halt, but growth is clearly becoming harder to come by. The competitive pound has boosted exports, as has increasing global demand.

"However, weakening consumer spending power is a real concern. The lack of real-terms wage inflation also continues to drag, as does low productivity. What’s more, companies still do not have clarity on the nature of Brexit, which is impeding long-term investment decisions."

She added that it was difficult to see an interest rate hike on the horizon without significant economic momentum.

Dean Turner, economist at UBS Wealth Management, points to the disappointing manufacturing figures as something to watch out for.

He added on the Bank of England's upcoming decision:

"Notwithstanding more hawkish tones from some MPC members, we think that with today’s figures in hand, it’s unlikely that the Bank of England will look to hike interest rates next week.  

"The pound has been relatively resilient of late, and hasn’t reacted to this release. We anticipate a further but mild strengthening against the US dollar over the next six to 12 months, as we should see more clarity on Brexit, with an increasing likelihood that a transition deal is agreed to smooth the UK's path out of the EU.”

Today's GDP figures, which showed that the UK economy grew by 0.3pc in the second quarter of the year, remain "largely anaemic", according to Hargreaves Lansdown senior economist Ben Brettell.

He is, however, more optimistic for the second half of the year:

"Yet despite lacklustre growth so far this year, there are tentative signs that things might improve in the second half.  

"Last week saw news that retail sales rose ahead of expectations, indicating the consumer may still have some petrol in the tank – though the Bank of England has expressed caution over rising levels of personal debt. Meanwhile inflation began to recede, which if it continues in the coming months could end the squeeze on real incomes."

The economy has suffered a "notable slowdown in the first half of this year", according to ONS head of national accounts Darren Morgan.

He added: 

"While services such as retail, and film production and distribution showed some improvement in the second quarter, a weaker performance from construction and manufacturing pulled down overall growth."

1. UK GDP estimated to have increased by 0.3pc in the second quarter of 2017, a slight pick-up from the first quarter.
2. Despite inflation outstripping real wage growth, the largest contributor to the growth was retail trade, which improved from a first quarter fall.
3. Construction and manufacturing were the biggest drags on growth.
4. Limited reaction on the currency markets as growth was in line with analyst expectations. Pound pares pre-release rally against the dollar and is currently trading 0.2pc lower at $1.3011.

Preliminary data from the ONS shows that the UK economy grew by 0.3pc in the second quarter of the year, a small pick-up from the 0.2pc growth in the first quarter.

Asian and US equities rallied overnight after companies reported strong corporate results boosted by a weak dollar. The S&P closed at new all-time high as earnings beat expectations while the Dow Jones and Nikkei both gained just under 0.5pc. McDonalds and Caterpillar were yesterday's highlights stateside, both bolstered by strong overseas figures.

CMC Markets analyst Michael Hewson commented:

"Fortunately for a lot of those companies we’ve seen the US dollar decline 8% on a trade weighted basis since the beginning of the year, and while a lot of the stock market gains since then have been predicated on the basis of some form of fiscal stimulus, which looks unlikely to arrive at the moment, the offset is that for companies like Caterpillar the decline in the US dollar has helped it boost sales overseas, especially in Asia Pacific.

"Another US multinational, fast food chain, McDonalds also posted numbers that beat expectations with strong sales in the UK, US, Canada, Germany and Chinese markets, and the resultant reaction saw the S&P500 post another record high and close last night" 

Winfried Kretschmann, state leader in Germany's Baden-Wuttemberg state, which is home to car brands such as Mercedes-Benz and Porsche, has said that a ban on diesel cars can be avoided if there's proper retrofitting.

He told ARD public television:

"This depends on whether we are able to apply retrofitting that's effective, and, secondly, verifiable. Thirdly, it must apply to all and finally the car industry has to bear the costs."

The more immediate consequence from today's news is that new pollution taxes will be placed on diesel drivers using congested roads from 2020 to lower the risk to public health.

German carmakers have not been hit so far by the prospect of increased taxes and the future ban on polluting cars. Mercedes-maker Daimler, Volkswagen, BMW and Continental AG are all up on the DAX.

Volvo, which announced that it will go all electric from 2019 early this month, has had a modest rise over in Stockholm.

Automobile parts maker GKN has dipped 2.9pc but the FTSE 100 firm also reported that sales in the first half missed analyst estimates this morning.

The consensus is that there will a small acceleration in GDP growth from 0.2pc in the first quarter to 0.3pc in the second.

Indications are that the UK economy might have done slightly better if the index of services is any guide, according to CMC Markets analyst Michael Hewson.

However, Patheon Macro has predicted this morning a smaller increase, 0.2pc, saying that while business surveys "point to solid growth" the official data for the quarter has been "very weak so far". If correct, expect the pound to slip back below $1.30 again.

Ipek Ozkardeskaya, London Capital Group analyst, commented on how it could move sterling today:

 "Traders could seize a breakout opportunity on the back of the UK’s second quarter preliminary GDP data, due today.

"According to analysts, the UK GDP may have grown by 0.3% in the second quarter versus 0.2% previously.

"However, the year-on-year growth may have eased to 1.7% from 2.0%, in line with the IMF’s recent downgrade of the Britain’s 2017 growth forecast. A soft read could weigh on the 1.30 support and bring the 1.2920, the short-term range bottom, at risk."

Welcome to our live markets coverage.

The pound has come off yesterday's highs against the dollar ahead of preliminary UK GDP data out at 9.30am, which is expected to show that the UK economy grew by 0.3pc in the second quarter. This morning sterling has fallen 0.2pc against the dollar and is trading at $1.3011.

The pound could face turbulence later this afternoon when the Federal Reserve tells the market of its latest rate decision. No change is expected in terms of policy but, like at the European Central Bank last week, investors will poring over the details and subtle shifts in tone.

Brent crude jumped a notch higher overnight after the American Petroleum Institute reported that US stocks shrank by 10.2m barrels last week, far higher than analysts' expectations. It is trading at $50.60 per barrel this morning.

Long-term oil bulls will be less pleased to see that petrol and diesel cars will be banned from Britain's roads from 2040 with diesel drivers to face new pollution taxes in urban areas.

The FTSE 100 has opened brightly again with ITV and housebuilder Barratt Developments leading the pack early on.

Plenty of results for investors to pick over today with GlaxoSmithKline due to report a bit later this morning and ITV posting a 8pc fall in ad revenue, hitting pre-tax profits by 10pc. 

Interim result: GlaxoSmithKline, ITV, Jupiter Fund Management, Staffline Group, GKN, Unite Group, Tullow Oil, Berendsen, International Personal Finance, Centaur Media, Huntsworth, Hammerson

Full result: Diageo, Torotrak, Sky, Renishaw, Angle AGM: Mitie Group, FreeAgent Holdings

Trading statement: 3i Group, Antofagasta, Marston’s, Brewin Dolphin Holdings, Paragon Group of Companies, Sage Group, Compass Group

Economics: Nationwide house price index m/m (UK), Preliminary GDP q/q (UK), BBA Mortgage Approvals (UK), Index of services 3m/3m (UK), CBI realised sales (UK), New home sales (US), Federal funds rate (US) FOMC statement (US)