London open: Stocks edge up as investors mull retail sales; M&S surges
London stocks edged higher in early trade on Friday following heavy losses in the previous session, as investors digested the latest UK retail sales data.
At 0830 BST, the FTSE 100 was up 0.2% at 7,070.75.
Figures out earlier from the Office for National Statistics showed that retail sales unexpectedly fell in July as people spent less on groceries and more on going out.
Retail sales declined 2.5% on the month versus expectations for a 0.4% increase. Still, they were up 5.8% compared with their pre-pandemic levels in February 2020.
Food store sales were down 1.5% following an increase in June, when sales were boosted by the start of the Euro 2020 football championship. Meanwhile, non-food stores reported a 4.4% drop in sales volumes compared with June.
Jonathan Athow, deputy national statistician at the ONS, said: "Following the Euro 2020-related boost in June, retail sales fell in July to their lowest level since shops re-opened in April, but still remain well above pre-pandemic levels.
"Food sales fell back as further lifting of hospitality restrictions meant consumers had more opportunities to spend outside retail.
"Heavy rainfall at the start of July hit fuel sales, which dipped for the first time since February."
ING economist James Smith said: "We're not convinced July's fall in UK retail sales can be put down to the rapid spread of the Delta variant.
"Social spending is a better place to look for that impact, and so far it appears smaller than might have been expected. Instead, retail's latest fall may be down to a rebalancing towards services after lockdowns."
Separate data released by the ONS showed that government borrowing was £10.4bn in July, down by £10.1bn compared with July last year and below consensus expectations of £11.9bn. It was the second-highest figure for July since records began.
In equity markets, Marks & Spencer racked up impressive gains after saying it expected annual profits to be at the top end of expectations as it reported a sharp rise in revenues during the summer.
Assuming no further Covid-related restrictions on trading, M&S forecast adjusted profit before tax for the year to be above the upper end of previous guidance of £300m - £350m. Group revenue surged 29.1% in the 19 weeks to August 14 and was 4.4% higher than 2019 before the Covid-19 pandemic struck and forced the closure of the retailer’s stores.
Other retailers also gained, with Next and JD Sports both in the black.
Morrisons shares rallied after it agreed a £7bn takeover by US private equity firm Clayton, Dubilier & Rice. A consortium led by Fortress Group said it was "considering its options" after its own takeover offer was trumped by CD&R.
Tesco and Sainsbury’s were also on the front foot.
Elsewhere, Babcock was a high riser after an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley, which said the shares offer "significant value".
Market Movers
FTSE 100 (UKX) 7,070.75 0.17%
FTSE 250 (MCX) 23,653.44 0.20%
techMARK (TASX) 4,820.27 0.32%
FTSE 100 - Risers
Next (NXT) 7,980.00p 2.07%
JD Sports Fashion (JD.) 982.00p 1.34%
Sainsbury (J) (SBRY) 292.60p 1.18%
Tesco (TSCO) 246.35p 0.96%
Imperial Brands (IMB) 1,533.50p 0.95%
Royal Dutch Shell 'A' (RDSA) 1,396.20p 0.84%
B&M European Value Retail S.A. (DI) (BME) 560.40p 0.79%
Royal Dutch Shell 'B' (RDSB) 1,386.00p 0.76%
Associated British Foods (ABF) 2,010.00p 0.75%
British Land Company (BLND) 518.40p 0.74%
FTSE 100 - Fallers
Abrdn (ABDN) 260.30p -1.06%
Diageo (DGE) 3,530.50p -1.02%
Antofagasta (ANTO) 1,392.50p -0.89%
Melrose Industries (MRO) 164.70p -0.45%
Scottish Mortgage Inv Trust (SMT) 1,337.00p -0.41%
Pershing Square Holdings Ltd NPV (PSH) 2,555.00p -0.39%
Fresnillo (FRES) 832.60p -0.38%
M&G (MNG) 209.20p -0.33%
Intermediate Capital Group (ICP) 2,128.00p -0.33%
Auto Trader Group (AUTO) 638.00p -0.31%
FTSE 250 - Risers
Marks & Spencer Group (MKS) 156.90p 9.95%
Babcock International Group (BAB) 361.70p 4.75%
Morrison (Wm) Supermarkets (MRW) 291.90p 4.55%
Mediclinic International (MDC) 293.40p 2.09%
QinetiQ Group (QQ.) 339.40p 2.04%
TI Fluid Systems (TIFS) 319.00p 1.59%
Capital & Counties Properties (CAPC) 172.00p 1.53%
Apax Global Alpha Limited (APAX) 220.00p 1.38%
Plus500 Ltd (DI) (PLUS) 1,496.00p 1.29%
XP Power Ltd. (DI) (XPP) 5,620.00p 1.26%
FTSE 250 - Fallers
Network International Holdings (NETW) 360.20p -4.73%
Fidelity China Special Situations (FCSS) 331.00p -2.65%
Energean (ENOG) 605.00p -2.42%
IWG (IWG) 291.70p -2.34%
PZ Cussons (PZC) 244.00p -2.01%
Just Group (JUST) 90.00p -1.80%
National Express Group (NEX) 256.60p -1.38%
Bodycote (BOY) 933.50p -1.16%
Reach (RCH) 383.50p -1.16%
Trustpilot Group (TRST) 377.40p -1.00%