London midday: Stocks extend gains after retail sales; NatWest rallies

London stocks had extended gains by midday on Friday following the release of better-than-expected UK retail sales data and well-received results from NatWest.

The FTSE 100 was up 1% at 7,676.68.

Russ Mould, investment director at AJ Bell, said: "As we head towards the spring, the market seems to be getting more optimistic and, after a tricky few weeks, the FTSE 100 is close to regaining the levels it saw at the start of 2024.

“The inflation shock from the US earlier in the week seems to have been shrugged off for now, even if it has pushed back expectations for when the Federal Reserve will start cutting interest rates.

"Gains in Asia and the US overnight were augmented by better-than-expected results from NatWest which helped drag the rest of the banking sector higher and the retail sector was lifted by a pretty stunning rebound in retail sales in January from December’s miserable figures. The data was way ahead of expectations and suggests, despite the UK slipping into a technical recession, the UK consumer remains surprisingly resilient.

"Later today the market will be able to weigh a measure of consumer sentiment from the US and the latest producer prices index reading. So-called factory gate prices are significant because when manufacturers and other producers charge more for goods and services the higher costs usually feed through to the consumer."

On home shores, figures from the Office for National Statistics showed that retail sales rose 3.4% in January following a downwardly-revised 3.3% drop in December, coming in comfortably above economists’ expectations for a 1.5% increase.

Both food and non-food sales strengthened. Food store sales volumes jumped 3.4% over the month, or by 0.6% over the year, recovering from December’s record 3.1% slide.

Non-food store sales rose 3%, in contrast to December’s 3.9% fall.

In the three months to January, total sales volumes eased 0.2% on the previous quarter, the smallest decline since August.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: "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.

"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."

December is traditionally one of the busiest, and most important, months of the year for the retail sector.

However, hard-pressed consumers carried out much of their Christmas shopping in November last year, to take advantage of Black Friday discounts.

In equity markets, NatWest Bank rallied as it reported a 20% rise in operating profit and confirmed Paul Thwaite as chief executive on a permanent basis. NatWest said 2023 pre-tax operating profit came in at £6.17bn, beating the £5.95bn average of analyst forecasts compiled by the bank. Total income rose to £14.7bn, up from £13.1bn a year earlier.

Segro rose after it struck an upbeat tone, as full-year pre-tax losses narrowed and rental income improved.

On the downside, Close Brothers fell sharply again as Berenberg slashed its price target on the shares and cut estimates after the merchant bank announced on Thursday that it was scrapping its dividend amid a regulator probe into car financing.

Market Movers

FTSE 100 (UKX) 7,676.68 1.04%
FTSE 250 (MCX) 19,199.12 0.52%
techMARK (TASX) 4,364.28 -0.49%

FTSE 100 - Risers

NATWEST GROUP (NWG) 227.10p 5.97%
Prudential (PRU) 838.60p 3.84%
Anglo American (AAL) 1,834.60p 3.83%
Antofagasta (ANTO) 1,752.00p 3.70%
Centrica (CNA) 140.75p 3.34%
Rio Tinto (RIO) 5,504.00p 3.30%
Standard Chartered (STAN) 597.80p 2.93%
Lloyds Banking Group (LLOY) 42.59p 2.44%
Glencore (GLEN) 400.40p 2.39%
Weir Group (WEIR) 1,844.00p 2.39%

FTSE 100 - Fallers

Airtel Africa (AAF) 97.30p -2.21%
Rolls-Royce Holdings (RR.) 316.70p -1.03%
Melrose Industries (MRO) 604.80p -0.98%
Ocado Group (OCDO) 533.80p -0.96%
London Stock Exchange Group (LSEG) 8,836.00p -0.76%
British American Tobacco (BATS) 2,407.50p -0.60%
Associated British Foods (ABF) 2,275.00p -0.44%
Admiral Group (ADM) 2,571.00p -0.39%
Vodafone Group (VOD) 66.33p -0.36%
Pearson (PSON) 965.60p -0.35%

FTSE 250 - Risers

Baltic Classifieds Group (BCG) 236.00p 3.96%
PureTech Health (PRTC) 189.20p 2.60%
Hill and Smith (HILS) 1,852.00p 2.43%
Harbour Energy (HBR) 266.40p 2.26%
Fidelity China Special Situations (FCSS) 192.20p 2.23%
Dunelm Group (DNLM) 1,109.00p 2.21%
TUI AG Reg Shs (DI) (TUI) 546.00p 2.15%
HGCapital Trust (HGT) 432.00p 2.13%
Oxford Instruments (OXIG) 2,180.00p 2.11%
Tullow Oil (TLW) 30.70p 2.06%

FTSE 250 - Fallers

Close Brothers Group (CBG) 288.40p -6.49%
Genus (GNS) 1,753.00p -1.52%
Bank of Georgia Group (BGEO) 3,985.00p -1.12%
Domino's Pizza Group (DOM) 348.60p -0.97%
Big Yellow Group (BYG) 1,074.00p -0.92%
Hargreaves Lansdown (HL.) 827.00p -0.84%
Discoverie Group (DSCV) 723.00p -0.82%
Direct Line Insurance Group (DLG) 171.85p -0.78%
Barr (A.G.) (BAG) 531.00p -0.75%
TP Icap Group (TCAP) 176.50p -0.73%