London close: Stocks rise as UK retail sales rebound

London's stock markets saw positive gains on Friday, buoyed by encouraging UK retail sales data and favourable earnings reports from NatWest.

The FTSE 100 index rose 1.5% to close at 7,711.71, while the FTSE 250 managed a modest increase of 0.48%, reaching 19,191.93 by the end of trading.

In currency markets, sterling was last down 0.1% on the dollar to trade at $1.2587, while it saw a marginal drop of 0.05% against the euro to change hands at €1.1690.

“The FTSE 100 outperforming its peers in a rising market is a rare phenomenon, especially when some like the French CAC 40 and German DAX 40 are making new record highs,” said IG senior market analyst Axel Rudolph.

“The UK blue chip index has risen by close to 3% in the past three days and today shrugged off US producer prices rising the most in five months which curtailed the bull run in other markets on both sides of the pond.

“UK retail sales rising the most in nearly three years and Natwest reporting its biggest annual profit since the 2007 financial crisis in addition to the rising oil price have all contributed to the FTSE 100's strong gains.”

Rudolph added that the Brent crude oil price had risen on nine of the past ten trading days, as investors mulled over the situation in the Middle East amid supply concerns.

“US natural gas prices have picked up by around 2% on short selling profit-taking ahead of the weekend.

“This followed their slide to their lowest level since July 2020 amid ample production levels and subdued demand due to clement weather.

“The gold price has seen little change on the day but the silver price has risen ahead of next week's FOMC minutes.”

Retail sales rebound in the UK, US wholesale prices rise

In economic news, fresh official data revealed a robust rebound in UK retail sales for January, marking a sharp turnaround from December's decline.

The Office for National Statistics reported a notable 3.4% increase in retail sales volumes last month, surpassing analyst expectations of a 1.5% rise.

The surge, the largest monthly increase since April 2021, was supported by strengthened sales in both food and non-food sectors.

Food store sales volumes bounced back by 3.4%, while non-food store sales rose by 3%.

“Overall sales have now recovered to pre-December levels, although if we look at the broader picture, they are still below where they were pre-pandemic,” said Heather Bovill, deputy director for surveys and economic indicators at the ONS.

“Sales increased across nearly all retail sectors, and it was a particularly strong month for supermarkets - a fall in prices at the pump also meant a solid month for fuel sales.

“Clothing shops were the only area not to see growth this month.”

Across the pond, wholesale prices in the United States climbed more quickly than anticipated in January, according to the Department of Labor.

The producer price index showed a month-on-month increase of 0.3%, exceeding the consensus forecast of 0.1%.

While food prices experienced a slight decline of 0.3%, energy prices fell by 1.7%, with services prices recording a notable increase of 0.6%.

Despite a slight dip from December, the annual rate of increase in headline producer prices remained at 0.9% in January, surpassing the consensus forecast of 0.6%.

“Finally, the release of the PPI data means we can finalise our core PCE forecast for January, at 0.32%,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.

“That would be the biggest increase since September, but the three months since then all saw much smaller gains.

“Note too that nearly a quarter of the January increase will come from the portfolio management component, which just lags the stock market.”

Meanwhile, preliminary results from the University of Michigan's consumer confidence index showed little change in the US in early February.

The index printed at 79.6, slightly higher than January's reading of 79.0 but below economists' expectations of 80.0.

That stable consumer sentiment follows two months of significant gains, indicating a steady but cautious outlook among American consumers amidst ongoing economic uncertainties.

“The fact that sentiment lost no ground this month suggests that consumers continue to feel more assured about the economy, confirming the considerable improvements in December and January across various aspects of the economy,” said Joanne Hsu, the survey's director.

“Consumers continued to express confidence that the slowdown in inflation and strength in labour markets would continue.”

NatWest jumps on results, Close Brothers in the red

On London’s equity markets, NatWest Group jumped 7.09% after the bank reported a 20% increase in operating profit for 2023, surpassing analyst forecasts.

The appointment of Paul Thwaite as chief executive on a permanent basis further fueled investor confidence.

NatWest's total income also saw a substantial rise, reaching £14.7bn.

Sector peers Lloyds Banking Group and Standard Chartered also saw gains, rising 3.9% and 2.38% by the close, respectively.

Mining stocks also performed well, with Antofagasta, Rio Tinto, and Anglo American posting respective gains of 5.65%, 3.51%, and 3%.

Elsewhere, Segro saw a rise of 1.94% after reporting narrowed pre-tax losses and improved rental income, striking an upbeat tone for investors.

On the downside, Close Brothers Group experienced a decline of 2.98% following a sharp fall on Thursday.

The drop came after Berenberg slashed its price target on the shares and adjusted estimates downward, following the company's announcement of scrapping its dividend amid a regulator probe into car financing.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 7,711.71 1.50%
FTSE 250 (MCX) 19,191.93 0.48%
techMARK (TASX) 4,382.52 -0.07%

FTSE 100 - Risers

NATWEST GROUP (NWG) 230.20p 7.09%
Antofagasta (ANTO) 1,785.00p 5.65%
Lloyds Banking Group (LLOY) 43.20p 3.90%
Weir Group (WEIR) 1,870.50p 3.86%
IMI (IMI) 1,755.00p 3.81%
Rio Tinto (RIO) 5,515.00p 3.51%
Prudential (PRU) 834.40p 3.32%
St James's Place (STJ) 652.80p 3.18%
Rentokil Initial (RTO) 427.80p 2.96%
Ashtead Group (AHT) 5,400.00p 2.86%

FTSE 100 - Fallers

Airtel Africa (AAF) 96.20p -3.22%
Vodafone Group (VOD) 65.63p -1.41%
Entain (ENT) 933.40p -0.58%
Ocado Group (OCDO) 536.00p -0.56%
International Consolidated Airlines Group SA (CDI) (IAG) 145.65p -0.51%
British American Tobacco (BATS) 2,414.50p -0.35%
London Stock Exchange Group (LSEG) 8,888.00p -0.18%
BT Group (BT.A) 106.20p -0.09%
Whitbread (WTB) 3,482.00p -0.03%
Taylor Wimpey (TW.) 145.70p 0.00%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 237.50p 4.63%
TUI AG Reg Shs (DI) (TUI) 556.00p 4.02%
PureTech Health (PRTC) 190.40p 3.90%
Marshalls (MSLH) 290.00p 3.57%
4Imprint Group (FOUR) 5,590.00p 3.52%
Vesuvius (VSVS) 492.80p 3.49%
Energean (ENOG) 983.50p 3.31%
Oxford Instruments (OXIG) 2,205.00p 3.28%
Bodycote (BOY) 634.00p 3.26%
Tritax Eurobox (GBP) (EBOX) 50.70p 3.15%

FTSE 250 - Fallers

Close Brothers Group (CBG) 299.20p -2.98%
Trainline (TRN) 314.40p -2.66%
Wizz Air Holdings (WIZZ) 2,068.00p -2.13%
W.A.G Payment Solutions (WPS) 83.20p -2.12%
Ferrexpo (FXPO) 80.60p -2.01%
Me Group International (MEGP) 131.80p -1.93%
North Atlantic Smaller Companies Inv Trust (NAS) 3,750.00p -1.83%
The Renewables Infrastructure Group Limited (TRIG) 96.30p -1.73%
Domino's Pizza Group (DOM) 346.00p -1.70%
Indivior (INDV) 1,404.00p -1.68%