London close: FTSE ends lower as oil prices and UK retail sales fall

The FTSE 100 closed lower on Thursday as a drop in oil prices weighed on sentiment and as official data revealed UK retail sales fell in March.

Further somewhat hawkish comments from a top US central bank official added to the downbeat mood.

By the end of trading, the Footsie was 92.63 points or 1.49% lower at 6,106.48 points.

Oil prices were under pressure after the Energy Information Administration on Wednesday reported US crude stocks rose by 9.4m barrels to 532.5m barrels in the week ended 18 March. Analysts had forecast an increase of 2.5m barrels.

Brent crude dipped 0.44% to $40.29 per barrel and West Texas Intermediate declined 0.93% to $39.42 per barrel at 1624 GMT.

To take note of, investors had bought at least £11bn pounds-worth of options - an amount equivalent to Iceland's GDP - thus far in 2016 that would yield profits if the pound lost the $1.3502 mark following the 23 June referendum, according to Bloomberg.

In economic data, UK retail sales dropped 0.4% month-on-month in February as cold weather delayed the purchases of spring and summer attire, the Office for National Statistics revealed. Analysts had forecast a 1.0% decrease in February, after rising the most in more than two years in January.

“Shoppers tend to be tight-fisted after the January sales, but deeper concerns surrounding a possible Brexit might be making them think twice before spending,” said Dennis de Jong, managing director at UFX.com.

Dr. Howard Archer, chief UK+European economist at IHS Global Insight, concurred, “there is the possibility that a recent slowdown in earnings growth and increased worries over the economic outlook could make some consumers increasingly cautious in their spending – and a concern is that sentiment will slide further over the next few months as uncertainty over the outlook intensifies ahead of the 23 June referendum on UK membership of the European Union,” he said in a note e-mailed to clients.

However, compared to the same month a year ago retail sales jumped 3.8% in February, surpassing estimates for a 3.5% gain, as low inflation and an increase in employment supported consumer spending.

Across the Atlantic, the Commerce Department said US durable goods orders fell 2.8% on the previous month, slightly better than the consensus estimate for a 3% decrease and down from the revised increase of 4.2% the month before.

Markit’s purchasing managers’ index on US manufacturing rose to 51.4 in March from 51.3 in February, missing expectations for a reading of 51.5 but above the 50 level that separates an expansion from a contraction.

The Labor Department revealed US initial jobless claims rose by 6,000 to 265,000, versus economists’ expectations for an increase to 268,000.

St Louis Federal Reserve President James Bullard said on Thursday another US interest rate “may not be far off” as the labour market had improved since December.

Bullard, who voted to support the Fed’s decision in March to keep interest rates unchanged, said: "As it turns out, the decision to pause seems to have put more weight on the global and U.S. growth downgrade," he said in prepared remarks.

As always, additional rate increases would be conditional on the economy evolving as expected, he explained.

His remarks echoed those made since 18 March by at least three other Fed presidents.

Among corporate stocks, Kingfisher Group rallied after its stock had its ‘buy’ rating reaffirmed by Jefferies Group on Thursday following the company’s annual results a day earlier.

Next slumped after the clothing retailer warned in its full-year results that the year ahead could be the toughest since 2008, with new guidance that included the possibility that profits could decline as much as 4.5%.

Building materials group CRH gained following reports Northroad Capital Management reduced its position in the firm by 5.6% during the fourth quarter. Speculation was also still mounting over whether CRH would make a bid for LafargeHolcim’s Indian assets, rumoured to be up for sale.

Standard Chartered was down significantly as oil fell, and the Australia and New Zealand Banking Group warned the plunging resource prices were pushing up bad debts. It said provisions for bad debts would be more than expected at around AUD 900m as losses widened at miners and resource companies.

Renishaw plunged after the engineering company issued a profit warning due to a downturn in Asia.

Outsourcer Mitie declined on Thursday after it warned that full year revenues will be below the current range of market expectations.

Market Movers

FTSE 100 (UKX) 6,117.07 -1.32%
FTSE 250 (MCX) 16,691.02 -1.03%
techMARK (TASX) 3,084.01 -0.90%

FTSE 100 - Risers

Paddy Power Betfair (PPB) 9,300.00p 0.59%
Capita (CPI) 1,034.00p 0.58%
CRH (CRH) 1,949.00p 0.57%
Kingfisher (KGF) 373.30p 0.57%
London Stock Exchange Group (LSE) 2,832.00p 0.43%
Rolls-Royce Holdings (RR.) 680.50p 0.22%
TUI AG Reg Shs (DI) (TUI) 988.50p 0.10%
SSE (SSE) 1,460.00p -0.00%
Carnival (CCL) 3,520.00p -0.06%
Compass Group (CPG) 1,214.00p -0.08%

FTSE 100 - Fallers

Next (NXT) 5,655.00p -15.09%
Standard Chartered (STAN) 440.60p -7.75%
Associated British Foods (ABF) 3,273.00p -5.35%
Prudential (PRU) 1,275.50p -5.24%
Marks & Spencer Group (MKS) 392.50p -4.92%
Anglo American (AAL) 501.60p -4.18%
Ashtead Group (AHT) 825.00p -4.13%
Tesco (TSCO) 190.35p -3.64%
Aviva (AV.) 455.60p -3.56%
Legal & General Group (LGEN) 231.20p -3.34%

FTSE 250 - Risers

Vesuvius (VSVS) 331.40p 4.05%
Vectura Group (VEC) 164.30p 3.86%
Euromoney Institutional Investor (ERM) 909.00p 3.71%
Ocado Group (OCDO) 310.70p 3.19%
Fidessa Group (FDSA) 2,404.00p 2.96%
Diploma (DPLM) 747.00p 2.33%
Riverstone Energy Limited (RSE) 816.00p 2.19%
Evraz (EVR) 90.90p 2.02%
Circassia Pharmaceuticals (CIR) 265.40p 2.00%
Allied Minds (ALM) 461.50p 1.76%

FTSE 250 - Fallers

Renishaw (RSW) 1,880.00p -8.25%
Mitie Group (MTO) 245.60p -7.11%
Kaz Minerals (KAZ) 165.50p -6.76%
Countrywide (CWD) 364.00p -6.09%
Aberdeen Asset Management (ADN) 254.30p -5.95%
Brown (N.) Group (BWNG) 321.00p -5.62%
Tullow Oil (TLW) 200.00p -5.26%
Big Yellow Group (BYG) 773.00p -4.27%
SEGRO (SGRO) 400.20p -3.98%
Lancashire Holdings Limited (LRE) 535.00p -3.95%