London close: Stocks book small gains on US data deluge

London stocks managed muted gains by the close on Thursday, recovering from heavy losses a day earlier as investors digested the latest US retail sales data.

The FTSE 100 ended the session up 0.07% at 7,282.07, and the FTSE 250 was ahead 0.2% at 18,886.32.

Sterling was weaker, however, last trading down 0.55% against the dollar at $1.1476, and losing 0.64% on the euro to change hands at €1.1489.

“It’s been a mixed and subdued session for markets in Europe today, with the FTSE 100 modestly outperforming due to some modest merger and acquisition interest in the telecoms space, and outperformance from financials on the back of rising yields, with Lloyds, HSBC and NatWest all higher,” said CMC Markets chief market analyst Michael Hewson.

“Vodafone shares are higher along with those of Vantage Towers, on reports that private equity firms KKR and Global Infrastructure Partners are looking to take a stake in the $13bn Vantage business, of which Vodafone has an 82% stake.

“Having slumped sharply over the past couple of days to four-year lows, Ocado shares have enjoyed a modest rebound today with some evidence of bargain hunting taking place given the shares are already down over 60% year to date.”

In economic news, US retail sales unexpectedly rose in August, but the figures from the Labor Department in Washington showed demand was slowing.

Retail sales rose 0.3% following a downwardly-revised 0.4% decline in July, and versus consensus expectations of a 0.1% dip.

Previously, the figures for July had shown an unchanged reading.

The figures showed that consumers spent money on back-to-school items, vehicles and parts, and eating out.

Sales at gas stations fell 4.2%, while sales at auto dealerships rose 2.8%; excluding gasoline and motor vehicles, retail sales gained 0.3%.

ING economist James Knightley said that while the month-on-month retail sales figure was better than expected, there had been a number of revisions to the history that hinted at a softer trend in spending.

“Moreover, the control group, that excludes volatile items such as autos, building supplies and food service, which better matches broader consumer trends as measured within GDP, was considerably softer than predicted," he said.

"Spending was flat on the month rather than rising 0.5%, while July’s figure was revised down to growth of 0.4% having initially been reported as 0.8%.”

Still on US data, first-time unemployment claims fell to 213,000 in the week ended 10 September, according to the Labor Department, down from the previous week's revised print of 218,000 and well below market expectations for a reading of 226,000.

The drop brought about the lowest amount of weekly jobless claims since the last week of May, pointing to a tight labour market and giving the Fed the green light to make further aggressive interest rate hikes.

Meanwhile, the four-week moving average, which aims to strip out week-to-week volatility, came in at 224,000 - a decrease of 8,000 from the previous week's revised average.

Finally, US industrial production decreased 0.2% month-on-month in August, according to the Federal Reserve, missing market expectations for a 0.1% increase.

Manufacturing output ticked up 0.1%, down from a 0.6% rise in July, with the index for durable manufacturing unchanged, the index for non-durable manufacturing up 0.2%, and the index for other manufacturing dipping 0.1%.

The index for mining was unchanged, while the index for utilities decreased by 2.3%.

Earlier in the global day, it emerged that China’s central bank kept a key lending rate unchanged, in line with expectations.

The People’s Bank of China left the one-year medium-term lending facility (MLF) at 2.75%, after trimming it by 10 basis points in a surprise move in August.

It also provided CNY 400bn in one-year medium-term facility liquidity, unchanged from August and also in line with expectations.

“For all the talk of policy support, the PBoC is quietly stepping back, for now,” said Craig Botham at Pantheon Macroeconomics.

“We think this reflects the unfortunate reality of China’s liquidity trap, and the ongoing pressure on the renminbi.

“Monetary easing does more harm than good at the moment.”

On home shores, newly-appointed chancellor Kwasi Kwarteng was said to be considering scrapping the cap on bankers’ bonuses.

The European Union-wide rule - which caps bonuses at twice an employee’s salary - was introduced in 2014 in the wake of the 2008-2009 crisis, which saw banks collapse and ushered in austerity policies in the UK.

According to the Financial Times, which first reported the story, Kwarteng was wanting to scrap the rule to boost the City’s global competitiveness.

The FT said the chancellor believed it would make the City a more attractive destination for foreign bankers, and would be part of a package of post-Brexit reforms.

It said Kwarteng told City executives last week that “we need to be decisive and do things differently”.

In equity markets, housebuilders were in the green, with Barratt Developments up 4.38%, Berkeley Group ahead 3.37%, and Taylor Wimpey rising 4.05%.

On Wednesday, figures from the Office for National Statistics showed that house prices rose in the year to July at their highest annual rate since May 2003.

Online supermarket Ocado added 4.3%, having suffered heavy losses for two days in a row after it warned earlier in the week that it expected a fall in annual sales as customers started to tighten their belts amid the cost-of-living crisis.

Vodafone Group was up 1.98% following a report that KKR and Global Infrastructure Partners were among the private equity firms competing for a stake in the company’s wireless towers unit.

Bloomberg cited people familiar with the matter as saying that Swedish investment firm EQT was also exploring a potential investment in the Frankfurt-listed Vantage Towers.

It was understood that Vodafone had invited suitors to participate in an auction process.

On the downside, oil and gas giant Shell nudged 1.13% lower after it said that company veteran Wael Sawan would succeed chief executive Ben van Beurden, as the latter stepped down from the role at the end of 2022 following a 39-year career with the group.

It was reported earlier in September that van Beurden would be leaving the conglomerate.

“It is no surprise that of the reported shortlist of four candidates, renewables boss Sawan came out victorious, given the industry’s laser focus on the green energy transition and slashing emissions,” said Victoria Scholar, head of investment at Interactive Investor.

Hilton Food Group tumbled 28.27% after it warned on full-year profits as it posted a drop in interim pre-tax profit, having taken a hit from higher costs.

In broker note action, Tate & Lyle was boosted 2.36% by an upgrade to ‘buy’ at Citi, while Currys lost 2.79% after an initiation at ‘hold’ by Berenberg.

"With a credible strategy to rebuild the profitability of its UK and Ireland business, an under-appreciated Nordic presence, and a sustainably stronger balance sheet, there are several reasons to believe that there is upside to Currys’ share price on a medium- to long-term view," the bank said.

"However, given the group’s exposure to the increasingly difficult macroeconomic backdrop, we initiate coverage with a hold rating and 70p price target.”

Outside the FTSE 350, THG slid 18.37% after the online retailer downgraded its full-year expectations amid a challenging trading environment, and reported a 60% decline in first-half core earnings.

Elsewhere, DFS Furniture slipped 0.59% after it said there had been a reduction in order volumes from the fourth quarter, and noted the UK market continued to be “challenging”, with an uncertain outlook.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk and Iain Gilbert.

Market Movers

FTSE 100 (UKX) 7,282.07 0.07%
FTSE 250 (MCX) 18,886.32 0.20%
techMARK (TASX) 4,241.80 0.15%

FTSE 100 - Risers

Barratt Developments (BDEV) 424.20p 4.38%
Ocado Group (OCDO) 650.00p 4.30%
Taylor Wimpey (TW.) 107.80p 4.05%
Berkeley Group Holdings (The) (BKG) 3,592.00p 3.37%
Lloyds Banking Group (LLOY) 47.62p 3.05%
Admiral Group (ADM) 2,262.00p 2.91%
Entain (ENT) 1,234.00p 2.62%
Rolls-Royce Holdings (RR.) 76.86p 2.26%
Persimmon (PSN) 1,452.00p 2.18%
Pershing Square Holdings Ltd NPV (PSH) 2,860.00p 2.14%

FTSE 100 - Fallers

Melrose Industries (MRO) 111.75p -4.28%
Endeavour Mining (EDV) 1,656.00p -3.21%
Rentokil Initial (RTO) 522.20p -2.65%
Croda International (CRDA) 6,568.00p -2.64%
Dechra Pharmaceuticals (DPH) 3,088.00p -2.59%
Burberry Group (BRBY) 1,729.50p -2.40%
Howden Joinery Group (HWDN) 569.40p -2.33%
Tesco (TSCO) 232.00p -2.23%
Haleon (HLN) 264.45p -2.16%
Bunzl (BNZL) 2,751.00p -2.10%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 176.55p 17.05%
Carnival (CCL) 832.00p 8.16%
Redrow (RDW) 505.00p 6.41%
Abrdn Private Equity Opportunities Trust (APEO) 432.00p 5.87%
Crest Nicholson Holdings (CRST) 231.60p 5.27%
TUI AG Reg Shs (DI) (TUI) 139.00p 4.87%
Network International Holdings (NETW) 306.00p 4.72%
Bridgepoint Group (Reg S) (BPT) 258.80p 4.42%
Bellway (BWY) 2,012.00p 3.93%
Countryside Partnerships (CSP) 255.60p 3.90%

FTSE 250 - Fallers

Hilton Food Group (HFG) 675.00p -28.27%
Cranswick (CWK) 2,940.00p -5.28%
W.A.G Payment Solutions (WPS) 92.00p -4.90%
TBC Bank Group (TBCG) 1,754.00p -4.57%
ASOS (ASC) 649.00p -3.99%
Volution Group (FAN) 325.50p -3.97%
Tullow Oil (TLW) 48.82p -3.90%
Marks & Spencer Group (MKS) 115.75p -3.70%
Synthomer (SYNT) 166.90p -3.69%
FirstGroup (FGP) 118.70p -3.34%