In mid morning trading blue chips in London have eased back, with little reaction to the latest GDP release.

Shares had been weak ahead of the first quarter’s preliminary GDP data, with Associated British Foods and Barclays two of London’s biggest losers. ABF expects to feel the pinch from higher commodity prices – specifically sugar – and tighter-than-expected profit margins from its discount clothing retailer Primark.  This news has really knocked the stuffing out of the one-month recovery for the share price and investors, concerned about the lack of immediate upside in the current economic climate, may end up giving it a wide berth for now.

The main event for the UK was that GDP release, which came in at 0.5% as expected. As usual, stocks barely flinched on the news – the big early mover however was GBP/USD, jumping around 80 points and clawing back ground lost in early morning trading. Although the GDP figure comes as no surprise, it does mean that because we had a 0.5% contraction in the previous quarter, the UK has seen no growth for six months. Coupled with easing inflation, this may mean that expectations for a rise in rates from the Bank of England are pushed further back again.  Looking ahead to the US open at the moment we expect the Dow Jones to start off around 10 points lower.