London midday: Stocks push higher as L&G rallies; retail sales in focus

London stocks had extended gains by midday on Friday as data showed that retail sales bounced back in October but remained weaker than before the pandemic.

The FTSE 100 was up 0.9% at 7,409.04, while sterling was 0.3% firmer versus the dollar at 1.1897.

Figures released earlier by the Office for National Statistics showed that retail sales volumes nudged higher in October, partially reversing September’s fall.

Sales rose 0.6% following a fall of 1.5% - revised down from an initial estimate for 1.4% - in September, when shops and businesses closed for the state funeral of Elizabeth II. Analysts had been expecting a rise of around 0.5%.

Increases were seen across all the main sectors apart from food stores, where volumes fell 1%, or 4.1% when compared to pre-Covid levels in February 2020.

Industry data is increasingly showing that consumers, hit hard by the inflation and the cost-of-living crisis, are switching to cheaper brands and buying less when doing their weekly shops.

Non-food sales volumes rose by 1.1% in October 2022, although they remain 1.7% below February 2020.

Year-on-year, sales fell 6.1%, slightly better than forecasts for a fall of 6.5%, while in the three months to October, sales fell 2.4% against the previous three months.

Darren Morgan, ONS director of economic statistics, said: "Retail sales increased in October, although this is likely a rebound effect after weak sales last month as many retailers closed or operated differently on the extra bank holiday for the Queen’s funeral.

"Looking at the broader picture, retail sales continue their downward trend seen since summer 2021 and are below where they were pre-pandemic."

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said it was important to remember that overall, retail sales volumes are still below pre-pandemic times.

"With money being taken out of the economy thanks to yesterday’s tax increases, consumers are likely to rein in expenditure sooner rather than later," she said. "This would cause short-term pain for shops, but should ultimately help to bring inflation down, which would be good news for the wider economy."

Investors were also digesting the latest survey from GfK, which showed that UK consumer confidence nudged higher in November.

In equity markets, Legal & General jumped to the top of the FTSE 100 as it backed its full-year guidance for operating profit growth and capital generation and said its pension risk transfer business had continued to perform strongly.

Bodycote advanced as it held full-year guidance and said revenues in the four months to October 30 rose by a third due to price increases and energy cost surcharges.

British Gas owner Centrica, SSE and Drax were on the rise again after Chancellor Jeremy Hunt outlined new windfall taxes in his Autumn Statement on Thursday. Barclays said in a note that overall, the 45% levy - on excess profits above £75/MWh - is "better than worst case, and with clarity, Centrica, Drax and SSE should re-rate". It added that Centrica is its preferred UK utility.

On the downside, Intertek was knocked lower by a downgrade to ‘sell’ at Stifel, while outsourcer Mitie was weaker after a downgrade to ‘add’ at Numis.

Market Movers

FTSE 100 (UKX) 7,409.04 0.85%
FTSE 250 (MCX) 19,260.42 0.72%
techMARK (TASX) 4,359.46 0.55%

FTSE 100 - Risers

Legal & General Group (LGEN) 263.70p 3.98%
Intermediate Capital Group (ICP) 1,211.50p 3.37%
Flutter Entertainment (CDI) (FLTR) 11,565.00p 3.26%
Convatec Group (CTEC) 228.40p 3.25%
Phoenix Group Holdings (PHNX) 594.40p 3.05%
SSE (SSE) 1,713.00p 2.64%
M&G (MNG) 198.45p 2.51%
Ocado Group (OCDO) 679.60p 2.44%
3i Group (III) 1,311.50p 2.26%
NATWEST GROUP (NWG) 258.70p 2.25%

FTSE 100 - Fallers

Intertek Group (ITRK) 3,896.00p -1.59%
BAE Systems (BA.) 766.80p -0.98%
Prudential (PRU) 989.60p -0.80%
Haleon (HLN) 287.45p -0.66%
Rolls-Royce Holdings (RR.) 86.04p -0.65%
RS Group (RS1) 946.50p -0.42%
Smiths Group (SMIN) 1,590.00p -0.41%
Standard Chartered (STAN) 583.60p -0.21%
International Consolidated Airlines Group SA (CDI) (IAG) 131.52p -0.15%
Halma (HLMA) 2,244.00p -0.13%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 76.90p 10.17%
Liontrust Asset Management (LIO) 1,186.00p 7.43%
Aston Martin Lagonda Global Holdings (AML) 130.75p 6.47%
Bank of Georgia Group (BGEO) 2,585.00p 5.51%
Bodycote (BOY) 602.50p 3.88%
International Distributions Services (IDS) 246.00p 3.67%
Molten Ventures (GROW) 458.60p 3.61%
Tritax Big Box Reit (BBOX) 153.20p 3.10%
Abrdn (ABDN) 201.90p 3.01%
Direct Line Insurance Group (DLG) 216.60p 2.95%

FTSE 250 - Fallers

ASOS (ASC) 701.00p -2.91%
SSP Group (SSPG) 205.00p -2.80%
Wizz Air Holdings (WIZZ) 2,159.00p -1.82%
Mitie Group (MTO) 76.20p -1.80%
TUI AG Reg Shs (DI) (TUI) 142.90p -1.65%
Ninety One (N91) 198.80p -1.58%
Fidelity China Special Situations (FCSS) 218.50p -1.58%
Home Reit (HOME) 75.50p -1.56%
easyJet (EZJ) 383.00p -1.52%
Energean (ENOG) 1,405.00p -1.33%