London open: Stocks edge up after retail sales data

London stocks edged higher in early trade on Friday as investors mulled better-than-expected UK retail sales data, with Russia-Ukraine tensions still in focus.

At 0820 GMT, the FTSE 100 was up 0.3% at 7,558.06.

Figures released earlier by the Office for National Statistics showed that retail sales bounced back in January as shoppers hit the high street again.

Sales rose 1.9% following a 4% slump December, when Omicron took its toll. This was ahead of analyst expectations for a 1% increase and marked the strongest monthly jump since lockdown ended last Spring. It left sales volumes 3.6% above their pre-pandemic levels.

The data showed that non-food stores sales rose 3.4% in January as home improvement sales volumes picked up, with increased sales in household goods and garden centres. Meanwhile, automotive fuel sales were up 4.1% following a 5% decline in December, when home working and lower retail footfall reduced travel.

Adam Hoyes, assistant economist at Capital Economics, said the solid rise in retail sales volumes in January adds to signs that the Omicron-induced hit to activity was smaller and shorter-lived than previously thought.

"Even so, the cost of living crisis means the outlook for retailers is anything but bright," he said.

Data released earlier this week by the ONS showed that UK inflation hit 5.5% in January as consumer prices reached their highest level since 1992. This was up from 5.4% in December and compared to forecasts for an unchanged figure.

Earlier this month, the Bank of England said it expected inflation to peak at around 7.25% in April, when a 54% rise in regulated household energy bills will take effect.

Despite the positive tone, the crisis between Russia and Ukraine was keeping a cap on gains as investors hoped for a diplomatic resolution.

US Secretary of State Antony Blinken agreed to a meeting with Russia's foreign minister late next week provided Russia does not invade Ukraine, the US State Department said overnight.

Russia maintains it is withdrawing soldiers from Ukraine’s borders, but Washington on Thursday said the claim was false and accused Moscow of increasing troop numbers on the ground.

Tensions were heightened after the shelling of a village in Eastern Ukraine by pro-Russian forces in the Donbas region on Thursday.

"It is becoming increasingly clear that the US appears to think a Russian invasion is only a matter of time, and whether it comes this week, or in a few days, US officials want it to be clear that if, and when it does happen, Russia won’t be able to hide behind a ‘false flag’ event to justify it," said CMC Markets analyst Michael Hewson.

In equity markets, real estate investment trust Segro rallied after it hiked its full-year dividend and said 2021 had been "a highly successful year", with adjusted pre-tax profits and net asset value improving amid record levels of rental growth.

TBC Bank gained after it said annual profit more than doubled in 2021, driven by strong income and a recovery in the Georgian economy.

On the downside, NatWest Bank was weaker despite saying it swung to a full-year profit as it released more than £1.2bn in cash set aside for loan defaults during the Covid pandemic and said it expected to achieve a return on tangible equity "comfortably" above 10% in 2023.

The bank, majority owned by the UK taxpayer, posted a full-year attributable profit of £2.95bn compared with a £753m loss a year earlier. Fourth-quarter earnings came in at £434m against a loss of £109m in 2020, but lower than the £674m profit in the prior three months

Market Movers

FTSE 100 (UKX) 7,558.06 0.27%
FTSE 250 (MCX) 21,579.21 0.10%
techMARK (TASX) 4,364.50 -0.12%

FTSE 100 - Risers

Pearson (PSON) 633.20p 1.60%
Evraz (EVR) 308.90p 1.18%
Rio Tinto (RIO) 5,644.00p 1.00%
Glencore (GLEN) 424.85p 0.99%
Imperial Brands (IMB) 1,769.00p 0.88%
Diageo (DGE) 3,647.00p 0.86%
Anglo American (AAL) 3,553.00p 0.85%
SSE (SSE) 1,618.50p 0.81%
United Utilities Group (UU.) 1,059.00p 0.81%
National Grid (NG.) 1,087.00p 0.78%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 1,037.00p -2.08%
Ocado Group (OCDO) 1,341.00p -1.43%
Aveva Group (AVV) 2,653.00p -1.38%
NATWEST GROUP PLC ORD 100P (NWG) 237.60p -1.12%
Fresnillo (FRES) 687.20p -1.12%
Ashtead Group (AHT) 4,870.00p -1.00%
Dechra Pharmaceuticals (DPH) 3,874.00p -0.92%
Flutter Entertainment (CDI) (FLTR) 10,935.00p -0.73%
Spirax-Sarco Engineering (SPX) 11,800.00p -0.67%
GlaxoSmithKline (GSK) 1,569.20p -0.66%

FTSE 250 - Risers

Reach (RCH) 245.00p 3.59%
TBC Bank Group (TBCG) 1,524.00p 2.56%
Victrex plc (VCT) 1,990.00p 1.38%
Tritax Big Box Reit (BBOX) 231.60p 1.31%
Cineworld Group (CINE) 40.05p 1.01%
Mitie Group (MTO) 60.80p 1.00%
XP Power Ltd. (DI) (XPP) 4,645.00p 0.98%
Harbour Energy (HBR) 358.00p 0.96%
easyJet (EZJ) 696.60p 0.96%
Ferrexpo (FXPO) 277.00p 0.95%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 188.30p -2.08%
Darktrace (DARK) 314.40p -1.69%
Petropavlovsk (POG) 15.78p -1.38%
Carnival (CCL) 1,513.40p -1.37%
Auction Technology Group (ATG) 900.00p -1.10%
Trustpilot Group (TRST) 150.50p -1.05%
Petershill Partners (PHLL) 197.60p -1.00%
Helios Towers (HTWS) 149.00p -0.93%
Spirent Communications (SPT) 236.80p -0.92%
Provident Financial (PFG) 311.80p -0.89%