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London open: Stocks edge down in quiet trade; retail sales in focus
London stocks edged lower in quiet trade early trade on Friday as investors mulled the latest UK retail sales data.
At 0825 BST, the FTSE 100 was down 0.2% at 8,335.16.
Figures released earlier by the Office for National Statistics showed that retail sales bounced back in July, albeit a touch less than expected.
Sales volumes rose 0.5% on the month following a 0.9% decline in June, when they were hit by bad weather and uncertainty over the general election. Economists were expecting a 0.6% increase.
June’s fall was revised from an initial estimate of a 1.2% decline.
The data showed that sales volumes were up 1.4% versus July 2023. Compared with their pre-Covid level in February 2020, sales were down 0.8%.
ONS director of economic statistics Liz McKeown said: “Retail sales grew in July led by increases in department stores and sports equipment shops, with both the Euros and discounting across many stores boosting sales.
“These increases were offset by a poor month for clothing and furniture shops, and falling fuel sales, despite prices at the pump falling.”
Alex Kerr, UK economist at Capital Economics, said the better start to the third quarter is not as good as it looks.
Kerr said: “The rebound in sales volumes wasn’t particularly broad based, with sales rising in three of the seven main sub sectors. Department stores posted a 4.0% m/m gain, with the ONS reporting that summer discounting and the Euro 2024 football championship boosted sales volumes. That said, the euros didn’t appear to bolster food sales volumes by much as they were unchanged in July. ‘Other’ stores, such as stalls and markets, and online sales also rose by 2.5% m/m and 0.7% m/m. But clothing and household goods sales both fell by 0.6% m/m. And fuel sales declined by 1.9% m/m, despite the 0.8% m/m fall in petrol prices in July.
“Ultimately, while it is good news that the retail sector has returned to growth at the start of Q3, it is perhaps not as good as the 0.5% m/m rise suggests. That said, overall real consumer spending still rose by 0.2% q/q in Q2 despite the 0.1% q/q decline in retail sales. And if spending off the high street continued to hold up well, overall consumer spending may be more robust than the retail sales data imply. What’s more, we continue to think that rising real incomes, as inflation falls, should mean consumer spending growth accelerates over the rest of this year.”
In corporate news, pharma giant GSK was little changed as it welcomed a ruling by the Florida State Court excluding expert testimony in the long-running Zantac lawsuit where the plaintiffs allege the heartburn drug caused cancer.
GSK said it would now seek dismissal of the upcoming Wilson case in Florida – whereby the plaintiffs “alleged a causal link between ranitidine and prostate cancer”.
AstraZeneca was also in focus as it announced that ‘Imfinzi’, or durvalumab, has been approved by the US FDA for treating resectable early-stage non-small cell lung cancer in adults without certain genetic mutations.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Banco Santander S.a. | +1.84% | +6.50 | 360.00 |
| 2 |  |
Crh Plc | +1.75% | +114.00 | 6,636.00 |
| 3 |  |
Carnival Plc | +1.66% | +18.00 | 1,105.00 |
| 4 |  |
Pershing Square Holdings Ltd | +1.60% | +58.00 | 3,692.00 |
| 5 |  |
Melrose Industries Plc | +1.42% | +7.10 | 505.60 |
| 6 |  |
Rentokil Initial Plc | +1.29% | +6.20 | 485.50 |
| 7 |  |
Investec Plc | +1.01% | +6.00 | 599.00 |
| 8 |  |
Admiral Group Plc | +0.94% | +28.00 | 3,021.00 |
| 9 |  |
Auto Trader Group Plc | +0.86% | +7.00 | 820.00 |
| 10 |  |
Standard Chartered Plc | +0.76% | +5.80 | 766.60 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
British American Tobacco Plc | -1.11% | -31.00 | 2,768.00 |
| 2 |  |
Diageo Plc | -1.07% | -27.00 | 2,493.50 |
| 3 |  |
Unilever Plc | -0.86% | -41.00 | 4,729.00 |
| 4 |  |
Berkeley Group Holdings (the) Plc | -0.85% | -45.00 | 5,270.00 |
| 5 |  |
Smiths Group Plc | -0.84% | -15.00 | 1,764.00 |
| 6 |  |
Rolls-royce Holdings Plc | -0.82% | -4.10 | 498.90 |
| 7 |  |
Shell Plc | -0.77% | -21.50 | 2,784.00 |
| 8 |  |
Ashtead Group Plc | -0.75% | -40.00 | 5,268.00 |
| 9 |  |
Haleon Plc | -0.75% | -2.80 | 372.30 |
| 10 |  |
Bp Plc | -0.72% | -3.20 | 440.25 |
US close: Stocks sharply higher following data deluge
Wall Street stocks closed sharply higher early on Thursday as investors digested a slew of data points.
At the close, the Dow Jones Industrial Average was up 1.39% at 40,563.06, while the S&P 500 advanced 1.61% to 5,543.122 and the Nasdaq Composite saw out the session 2.34% firmer at 17,594.50.
The Dow closed 554.67 points higher on Thursday, extending gains recorded in the previous session as market participants thumbed over July’s consumer price index, which revealed a slowing annual inflation rate of 2.9%, the lowest seen since 2021. Wednesday’s CPI reading seemingly reassured investors that an economic soft landing was still on the cards and that the Federal Reserve would likely lower interest rates at its September meeting.
As far as Thursday’s macro slate was concerned, unemployment claims in the US dipped unexpectedly during the previous week. According to the Department of Labor, in seasonally adjusted terms first time jobless claims fell by 7,000 over the week ending on 10 August to reach 227,000. Economists had forecast a slight rise to 235,000.
Elsewhere, Retail sales jumped last month, driven by a rebound in auto purchases. According to the Department of Commerce, in seasonally adjusted terms, retail sales volumes shot 1.0% higher month-on-month to reach $709.7bn. That followed a revised 0.2% decline in June, but was more than twice the 0.3% gain projected by economists. Excluding motor vehicles and parts, sales of which soared by 3.6% in comparison to June, after a 3.4% drop during the previous month, retail sales were up by a more modest 0.4%.
Moving on, Factory activity in the US mid-Atlantic region shrank unexpectedly in August, the results of a closely followed survey showed. The Federal Reserve Bank of Philadelphia‘s manufacturing sector index fell from a level of 13.9 in July to -7.0. Economists had pencilled in a reading of 7.0.
On a similar note, August’s Empire State manufacturing index increased to -4.7, according to the Federal Reserve Bank of New York, the highest reading in six months, ahead of expectations of a reading of -6.0 and the prior month’s print of -6.6.
Still on data, industrial production decreased 0.2% year-on-year in July, the first annual drop in three months, following a downwardly revised 1.1% increase in June, while capacity utilisation fell to a three-month low of 77.8% in July, short of market forecasts of 78.5%.
Finally, US business inventories increased 0.30% in June, according to the Census Bureau, while the NAHB‘s revealed its housing market index decreased to 39 points in August, down from 41 in July.
In the corporate space, Ulta Beauty shares traded higher on the back of news that Warren Buffet’s Berkshire Hathaway had taken a $266.0m stake in the firm, while Snowflake shares traded lower as Berkshire Hathaway entirely dissolved its shareholding.
Elsewhere, Cisco shares traded higher after the networking specialists posted quarterly earnings and revenue beats and issued optimistic forward guidance, and Walmart was in the green after the retailer’s latest batch of earnings were better than feared.
Friday newspaper round-up: Housing targets, WH Smith, Thurrock council
Angela Rayner has been warned that the government could risk missing its housing targets by placing too much emphasis on creating new towns across England. The deputy prime minister announced plans last month for the “largest housebuilding programme since the postwar period”, kickstarted by the construction of a generation of new towns. – Guardian
A debt-ridden English council has alleged in a high court lawsuit that a Dubai-based businessman misused £150m of its investments for personal gain, including buying a luxury yacht and private jet. Thurrock council in Essex, which formally declared effective bankruptcy in 2022 having run up debts of more than £1bn after a series of disastrous investments, is suing Liam Kavanagh and his firm Rockfire Capital in London’s high court. – Guardian
A flagship green fuel factory has been scrapped by the renewable energy giant Ørsted amid a lack of demand from customers. Work has halted on the FlagshipONE project, a proposed e-methanol plant in the Swedish town of Örnsköldsvik, meant to supply container ships as part of the battle to reach net zero. – Telegraph
Ministers must work closely with business to avoid “spooking” employers as they carry the biggest overhaul of workers’ rights in decades, a leading recruitment trade body has said. Neil Carberry, chief executive of the Recruitment & Employment Confederation (REC), said: “The government is right to make economic growth its focus. Only growth can turn employers’ sentiment to hire and invest, into action. – The Times
To many people, it is the place where you buy a book or magazine or to pick up some stationery. However, after 232 years in business, WH Smith has decided to open its first café. The first Smith’s Kitchen officially opened on Thursday in Princess Anne Hospital, Southampton. The 26-seat, 495 sq ft café, featuring both takeaway and dine-in options, is set to be rolled out to other hospitals. It comes shortly after WH Smith launched an own-brand food range of 30 products, including sandwiches. – The Times
