London open: Stocks rally after encouraging retail sales

London stocks rose in early trade on Friday following the release of encouraging UK retail sales data.

At 0840, the FTSE 100 was up 0.9% at 6,732.19 as figures from the Office for National Statistics showed retail sales recovered partly in February following a big fall at the start of the third national lockdown in January.

Retail sales rose 2.1% on the month in February, in line with consensus expectations and compared to an 8.2% slump the month before. Nevertheless, sales were still down 3.7% compared to February last year, before the coronavirus pandemic hit. This compares to a 5.9% slid in January and expectations for a 3.5% decline.

The ONS said non-food stores provided the largest positive contribution to monthly growth, with increases of 16.2% and 16.1% in department stores and household goods stores respectively. Clothing retailers reported the largest fall in sales volumes when compared to last February before the pandemic hit, down 50.4%.

The proportion spent online rose to a record 36.1% in February. This compares with 35.2% in January and 20% in February 2020.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Despite national restrictions, retail sales partially recovered from the hit they took in January.

"Food and department stores benefitted from essential retail remaining open with budget-end department stores seeing increased sales. Household goods also fared well, with feedback suggesting spending on home improvement and outdoor products boosted sales as consumers prepared for an easing of lockdown restrictions. However, clothing stores continue to struggle with sales down more than half on their pre-pandemic level."

ING economist James Smith said: "Things will improve when shops are allowed to reopen in April, though a greater consumer focus on services and the trend towards online shopping means the headwinds for traditional high-street retailers are building."

In equity markets, miners were on the front foot as metals prices rose, while oil giants Shell and BP gushed higher as oil prices pushed up on concerns that a ship blocking the Suez Canal could squeeze crude supplies.

Smiths Group was the top gainer on the FTSE 100 after it increased its interim dividend and said it was confident about meeting expectations for annual results as profit fell in the first half.

Aviva was also in the black after saying it had sold its Polish unit to Allianz for €2.5bn to focus on its strongest businesses in the UK, Ireland and Canada and cut debt.

Next was boosted by an upgrade to ‘outperform’ from ‘sector perform’ at RBC Capital Markets.

Kaz Minerals rallied after Nova Resources lifted its offer for the company to 850p a share, valuing the copper miner at £4.1bn.

Oxford Instruments surged to the top of the FTSE 250 after it said revenue is expected to be marginally ahead of last year.

On the downside, Imperial Brands was knocked lower by a downgrade to ‘hold’ at Jefferies while Ocado edged down after a downgrade to ‘hold’ at Berenberg.

Market Movers

FTSE 100 (UKX) 6,732.19 0.86%
FTSE 250 (MCX) 21,442.86 0.78%
techMARK (TASX) 4,207.91 0.93%

FTSE 100 - Risers

Smiths Group (SMIN) 1,537.00p 5.35%
Evraz (EVR) 551.00p 3.18%
Antofagasta (ANTO) 1,671.00p 3.08%
Glencore (GLEN) 277.00p 3.03%
Anglo American (AAL) 2,803.00p 2.82%
Rio Tinto (RIO) 5,499.00p 2.80%
Melrose Industries (MRO) 168.55p 2.71%
BP (BP.) 300.75p 2.40%
BHP Group (BHP) 2,071.50p 2.40%
Pershing Square Holdings Ltd NPV (PSH) 2,565.00p 2.19%

FTSE 100 - Fallers

Imperial Brands (IMB) 1,465.00p -1.91%
Standard Life Aberdeen (SLA) 290.40p -0.68%
National Grid (NG.) 867.40p -0.64%
United Utilities Group (UU.) 908.80p -0.63%
Polymetal International (POLY) 1,417.00p -0.60%
Ocado Group (OCDO) 2,069.00p -0.53%
Severn Trent (SVT) 2,305.00p -0.35%
SSE (SSE) 1,444.50p -0.34%
Taylor Wimpey (TW.) 180.10p -0.25%
Entain (ENT) 1,530.50p -0.23%

FTSE 250 - Risers

Oxford Instruments (OXIG) 2,005.00p 11.89%
Cineworld Group (CINE) 98.36p 3.54%
Kaz Minerals (KAZ) 864.20p 2.88%
National Express Group (NEX) 316.60p 2.79%
Virgin Money UK (VMUK) 194.20p 2.78%
4Imprint Group (FOUR) 2,470.00p 2.49%
Tullow Oil (TLW) 51.10p 2.40%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 900.00p 2.39%
Trainline (TRN) 465.20p 2.38%
Wood Group (John) (WG.) 274.90p 2.35%

FTSE 250 - Fallers

PureTech Health (PRTC) 374.00p -5.08%
HGCapital Trust (HGT) 315.50p -0.79%
Network International Holdings (NETW) 406.40p -0.59%
Cranswick (CWK) 3,562.00p -0.56%
Future (FUTR) 1,858.00p -0.54%
GCP Infrastructure Investments Ltd (GCP) 102.00p -0.39%
Civitas Social Housing (CSH) 108.00p -0.37%
Bytes Technology Group (BYIT) 414.60p -0.29%
Pennon Group (PNN) 985.60p -0.24%
Wetherspoon (J.D.) (JDW) 1,331.00p -0.22%