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London open: FTSE nudges up as investors mull retail sales
London stocks nudged higher in early trade on Friday as investors mulled the latest retail sales data.
At 0825 GMT, the FTSE 100 was up 0.1% at 7,891.80, having gained sharply on Thursday.
Investors were mulling comments from Bank of England governor Andrew Bailey, who hinted in an interview with the Financial Times that rate cuts are on the way.
Bailey said rate cuts will be “in play” at future Monetary Policy Committee meetings.
“It’s like the Sherlock Holmes dog that doesn’t bark. If the second-round effects don’t come through, that’s good because monetary policy has done its job,” he told the FT. “We have an increasingly positive story to tell on that.”
On the macro front, data released earlier by the Office for National Statistics showed that retail sales were flat in February following 3.6% growth the month before. This was ahead of expectations for a 0.4% decline.
January’s increase was revised up from 3.4%.
The ONS said clothing and department store sales rose because of new collections but this was offset by falls in food stores and fuel retailers. Online sales rose, particularly at clothing retailers, as wet weather affected footfall at bricks and mortar stores.
On an annual basis, sales were down 0.4% in February, and were down 1.3% from their pre- pandemic level in February 2020.
Elsewhere, a survey from GfK revealed that consumer confidence stalled in March.
The latest consumer confidence index from GfK was -21, unchanged on February, when it fell two points. It is, however, an improvement on March 2023, when the index was -36.
Within that, expectations for personal finances over the next 12 months rose two points from 0 in February.
The forward-looking economic situation measure was also higher, albeit by just one point, at -23.
In contrast, the major purchase index shed two points to -27.
Joe Staton, client strategy director at GfK, said: “Consumer confidence stalled in March.
“The improved personal finance measure is encouraging, because it’s the first positive and the highest score since December 2021.
“But is there a note of worry this month? Look back to last year and it’s clear the improvements in consumer confidence seem most months since January 2023 have vanished.
“Are we temporarily on pause, or are consumers about to press reverse? In the run-up to the general election, these are important questions for the future health of the economy.”
In equity markets, Phoenix Group rallied on the back of well-received full-year results.
On the downside, JD Sports slid as Nike fell after warning that sales will take a hit this year as it works to realign merchandise to better match what shoppers are after.
St James’s Place was knocked lower after RBC Capital Markets downgraded the shares to ‘sector perform’ from ‘outperform’ and slashed the price target to 500p from 950p, saying that “uncertainty reigns”.
Pub chain Wetherspoons tumbled even as it said trading continued to improve from the impact of the Covid pandemic, with like-for-like sales up 5.8% in the seven weeks to March 17 after a sharp jump in first-half pre-tax profit.
Earnings for the 26 weeks to January 28 rose to £36m from £4.6m a year earlier. Revenue surged 8% to £991m.
Derren Nathan, head of equity research at Hargreaves Lansdown, said: “Pub Chain J D Wetherspoon’s half year results tell a story of an impressive recovery. But the strong operating profit growth reflects the low-base to which this set of numbers were compared to. At under 7%, margins are still pretty thin and there was little in the statement to help see where an improvement might come from. The Group’s been steadily reducing and optimising its footprint and has a good record of outperforming its peers.
“A lot of capacity has come out of the market and the hint that there might be potential of about 1,000 pubs compared to a current total of 814, could see the estate start to grow again. That may see the return of dividends kicked further down the road. Location is key and recent openings include the Stargazer at the old Millenium Dome in Greenwich and the Star Light at Heathrow Airport.
“Overall, returning the estate to growth could be a welcome development. But there’s only so much you can grow if pub numbers remain static, and for now like-for-like growth has taken a step down. 5.8% isn’t awful but if it stays at this level for the rest of the year the market’s likely to be disappointed.”
Elsewhere, Darktrace tanked after KKR Dark Aggregator – a technology growth fund advised by US private equity firm KKR – sold 19.4m shares in the cybersecurity firm in a placing at 425p each.
Vodafone was in focus after the Competition and Markets Authority warned that it and Three will need to find ways to assuage its competition concerns and show that their planned $19bn merger would not leave consumers worse off or face a full investigation.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Phoenix Group Holdings Plc | +9.59% | +46.80 | 535.00 |
| 2 |  |
Bt Group Plc | +2.34% | +2.50 | 109.55 |
| 3 |  |
Wpp Plc | +2.28% | +16.60 | 744.80 |
| 4 |  |
Vodafone Group Plc | +2.27% | +1.53 | 69.03 |
| 5 |  |
Tui Ag | +2.05% | +12.00 | 596.00 |
| 6 |  |
Carnival Plc | +2.03% | +24.50 | 1,229.00 |
| 7 |  |
Lloyds Banking Group Plc | +1.81% | +0.93 | 52.42 |
| 8 |  |
Croda International Plc | +1.56% | +78.00 | 5,082.00 |
| 9 |  |
Centrica Plc | +1.56% | +1.95 | 127.15 |
| 10 |  |
Anglo American Plc | +1.50% | +28.80 | 1,952.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Ocado Group Plc | -2.16% | -10.30 | 466.40 |
| 2 |  |
Taylor Wimpey Plc | -1.20% | -1.70 | 140.55 |
| 3 |  |
Barratt Developments Plc | -1.11% | -5.30 | 473.70 |
| 4 |  |
Persimmon Plc | -0.90% | -12.00 | 1,322.00 |
| 5 |  |
Sage Group Plc | -0.63% | -8.00 | 1,257.00 |
| 6 |  |
Berkeley Group Holdings (the) Plc | -0.44% | -21.00 | 4,765.00 |
| 7 |  |
Mondi Plc | -0.22% | -3.00 | 1,363.50 |
| 8 |  |
Easyjet Plc | -0.18% | -1.00 | 549.60 |
| 9 |  |
Barclays Plc | -0.18% | -0.32 | 181.52 |
| 10 |  |
St. James’s Place Plc | -0.17% | -0.80 | 460.70 |
US close: Stocks rise as Reddit makes stellar debut
US equities finished in positive territory on Thursday, riding on the back of encouraging statements from the Federal Reserve.
Wall Street indices surged to new heights as investor confidence remained robust.
The Dow Jones Industrial Average climbed 0.68% to 39,781.37, while the S&P 500 advanced 0.32% to close at 5,241.53, and the Nasdaq Composite added 0.2% to settle at 16,401.84.
In currency markets, the dollar was last up 0.01% on the dollar to trade at 79.01p, while it slipped 0.01% against both the euro and the yen to last change hands at 92.07 euro cents and JPY 151.61.
“Markets have continued their euphoric reaction to this week’s central bank events, with the FTSE 100 closing in on 7,900 for the first time since May last year,” said IG chief market analyst Chris Beauchamp earlier.
“UK stocks have lagged far behind, but with the Bank of England now on a path to cutting rates we could see the FTSE 350 make further strides as the flow of investor money finally heads to the UK.”
Beauchamp quipped that a ‘no change’ policy meeting rarely produces “quite the excitement” as Wednesday night’s Fed decision.
“While nodding towards stronger than expected, the Fed’s decision to stick to current plans has resulted in yet more record highs for the Dow, S&P 500 and Nasdaq 100.
“Things do seem to be getting a little excessive in markets, especially since the S&P 500 has yet to register a pullback of more than 3% so far this year.”
Composite PMI dips in February, BoE maintains interest rates
In economic news, the S&P Global composite purchasing managers’ index (PMI) dipped slightly to 52.2 in March from 52.5 in February.
The decline stemmed from a drop in the services PMI, despite a rise in the manufacturing PMI. However, the overall figure still indicated expansion, albeit at a slower pace.
On the housing front, existing-home sales surged by an impressive 9.5% in February, reaching 4.38 million units.
The figure significantly surpassed expectations, which were set at 3.94 million units.
Across the Atlantic, the Bank of England (BoE) opted to keep interest rates unchanged at its Thursday meeting, in line with widespread expectations.
The Monetary Policy Committee (MPC) voted eight-to-one to maintain the cost of borrowing at 5.25%, a level that had persisted for six months, representing a 16-year high.
Swati Dhingra, an external committee member, voted for a 0.25 percentage point reduction to 5%, highlighting differing views within the MPC.
This decision contrasted with February’s meeting, during which two members had voted for a 25 basis point hike.
The BoE had previously implemented 14 consecutive rate hikes in response to soaring inflation, but with inflation now moderating, there was growing anticipation that the MPC could initiate rate cuts later this year.
Reddit rockets on debut, Apple falls on lawsuit news
In equity markets, social media platform Reddit made a splashy debut on the New York Stock Exchange (NYSE), surging 48.35% by the close in one of the most high-profile tech initial public offerings in recent years.
The company offered 22 million shares at $34 each, at the upper end of its price range of $31 to $34 per share, catapulting its valuation to around $6.4bn.
Micron Technology also made waves, soaring 14.13% to reach a record high.
The semiconductor giant exceeded second-quarter expectations and provided strong guidance for the third quarter.
On the downside, shares of iPhone maker Apple slid 4.09% amid legal woes.
The Department of Justice sued the tech giant, alleging antitrust violations that hindered customers from switching to competitors.
Boeing also faced downward pressure, reversing earlier gains to finish 0.04% weaker.
The stock ascended in earlier trading after Korean Air placed a substantial aircraft order worth $13.7bn.
Friday newspaper round-up: Mike Lynch, Three, Scottish Power
Two major UK high street banks have been accused of continuing to finance fossil fuel expansion in the North Sea despite signing a pledge to align their activities with the net zero climate goal. HSBC and NatWest have provided tens of millions in finance to Ithaca Energy, a British oil and gas company that is playing a key role in plans to exploit the controversial Rosebank oilfield north-west of the Shetland Islands. Another high street bank, Lloyds, also provided finance but has since sold down the debt. – Guardian
The British technology firm Autonomy struck millions of dollars’ worth of “handshake deals” through which it paid customers to buy its software, the jury in the fraud trial of its founder, Mike Lynch, has heard. Lynch, who co-founded and led Autonomy, has pleaded not guilty to 16 counts of wire fraud, securities fraud and conspiracy. He stands accused of orchestrating a huge fraud before Hewlett-Packard’s blockbuster takeover of the company in 2011. – Guardian
The billionaire Issa brothers have ripped out electric car charging points across Asda stores in a blow to customers who want to plug in their vehicles while they shop. New figures from the RAC reveal that Asda has slashed the number of electric vehicle chargers at its supermarkets by more than two thirds to just 46 devices over the past year. It had 165 devices at the start of 2023. – Telegraph
Three has reported its first annual loss since 2010, on the eve of a preliminary decision from the competition watchdog on its £18 billion merger with Vodafone. The mobile company cited the cost of implementing the 5G network, increased running expenses, larger site numbers and inflation for the loss before deductions of £117 million, compared with a profit of £147 million in 2022. – The Times
The owner of Scottish Power will invest £12 billion and create 1,000 jobs by expanding its wind and solar farms and upgrading the cables needed to transport power around the country, in the latest spending plans that are seen as crucial to decarbonising Britain’s electricity network. Under the four-year investment plan, Iberdrola will spend more in Britain than in Spain, Germany, France and Australia combined, and will be second only to the United States. – The Times
