London midday: Stocks extend gains as retail sales impress, pound flounders

The FTSE 100 was up 0.7% to 7,480.33, while the pound was down 0.5% versus the dollar and the euro at 1.2954 and 1.1254, respectively, as solid retail sales figures failed to provide a boost. The index tends to benefit from sterling weakness as around 70% of its constituents derive their earnings from overseas.

Chris Beauchamp, chief market analyst at IG, said: "A surprise bounce in retail sales has done nothing to help sterling, which continues to flounder against the US dollar after breaking back below $1.30 earlier this week. Markets do not yet seem convinced that inflation in the UK has peaked, while today’s better high street news is merely an improvement over last month’s dire figure. The picture is not as clear as it was, but the overall landscape of higher prices and weaker wages remains."

Data released earlier by the Office for National Statistics showed UK retail sales were rejuvenated by warm weather in June, though economists disagreed over whether this was a sign of a revitalised economy or a false dawn.

Retail sales volumes rose 0.9% in June, bouncing back from the 1.5% fall the prior month (revised down from its initial 1.1% estimate) and beating the consensus estimate of 0.5%.

Sales surged 3.0% compared June last year when the Brexit referendum dampened the mood, up from a 0.6% year-on-year rise in May and better than the 2.5% forecast by economists.

Food sales volumes fell by 0.5% month-to-month, while clothing sales increased 0.4% - which some economists said was disappointing for what was one of the warmest Junes on record.

Instead, the pickup in sales was driven by a 3.3% rebound in household goods sales, following a huge 5.8% fall in May, and a 2.8% jump in non-store sales, following a 1% decline in May.

The rebound in June's month-on-month sales volumes means sales in the second quarter is estimated to have risen 1.5%, with increases seen across all store types after a 1.4% fall in the first quarter.

Later, at 1245 BST, the European Central Bank will publish its latest policy announcement. The ECB is widely expected to keep interest rates on hold as market participants bet that it will announce plans in September to reduce its bond-buying.

On the corporate front, rental equipment firm Ashtead was the standout gainer after US peer United Rentals' second-quarter numbers beat expectations and the company lifted its 2017 earnings guidance.

Retailers Kingfisher, Next and Dunelm, was lifted on the ONS details about household goods and clothing.

International distribution and outsourcing group Bunzl ticked up after saying said it has made a binding offer to buy a group of businesses in France and has also bought a marketing services business in the UK for undisclosed sums.

Unilever edged higher after its first-half results came in stronger than expectations and the consumer goods colossus increased its guidance for full year profit margins.

Shares in Sports Direct rallied as it reported a near-60% drop in full-year underlying pre-tax on the back of the weaker pound, but its revenue came in ahead of expectations and its outlook was brighter than anticipated.

Going the other way, Anglo American reversed course to trade lower after it posted an 8% year-on-year increase in coper-equivalent production in its second quarter,while low cost carrier easyJet flew lower despite lifting its profit outlook and reporting a 16% jump in third-quarter revenue.

Moneysupermarket tumbled as it warned that adjusted operating profit for the full year will be at the lower end of the consensus range.

Market Movers

FTSE 100 (UKX) 7,480.33 0.67%
FTSE 250 (MCX) 19,748.23 0.28%
techMARK (TASX) 3,529.24 0.44%

FTSE 100 - Risers

Ashtead Group (AHT) 1,713.00p 3.25%
Kingfisher (KGF) 305.40p 2.79%
British American Tobacco (BATS) 5,394.00p 2.00%
Smurfit Kappa Group (SKG) 2,365.00p 1.59%
Standard Chartered (STAN) 822.80p 1.57%
Next (NXT) 3,737.00p 1.55%
Hargreaves Lansdown (HL.) 1,336.00p 1.44%
Wolseley (WOS) 4,618.00p 1.41%
BP (BP.) 452.00p 1.36%
WPP (WPP) 1,581.00p 1.35%

FTSE 100 - Fallers

easyJet (EZJ) 1,343.00p -5.29%
International Consolidated Airlines Group SA (CDI) (IAG) 605.50p -2.18%
Convatec Group (CTEC) 307.00p -0.97%
Randgold Resources Ltd. (RRS) 6,925.00p -0.57%
Schroders (SDR) 3,341.00p -0.48%
Babcock International Group (BAB) 844.00p -0.47%
Rio Tinto (RIO) 3,431.50p -0.44%
G4S (GFS) 339.00p -0.41%
Anglo American (AAL) 1,129.00p -0.35%
Paddy Power Betfair (PPB) 7,585.00p -0.33%

FTSE 250 - Risers

Sports Direct International (SPD) 323.70p 7.65%
Dixons Carphone (DC.) 270.20p 2.54%
OneSavings Bank (OSB) 393.50p 2.53%
SIG (SHI) 162.30p 2.53%
Ashmore Group (ASHM) 363.00p 2.34%
Amec Foster Wheeler (AMFW) 453.10p 2.26%
Hastings Group Holdings (HSTG) 314.80p 2.24%
Dunelm Group (DNLM) 591.00p 2.16%
Virgin Money Holdings (UK) (VM.) 310.10p 1.94%
Savills (SVS) 900.00p 1.87%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 339.70p -5.48%
Drax Group (DRX) 318.80p -4.32%
Carillion (CLLN) 66.10p -2.79%
QinetiQ Group (QQ.) 241.40p -2.74%
Homeserve (HSV) 723.50p -2.23%
Just Eat (JE.) 692.00p -2.12%
ZPG Plc (ZPG) 367.40p -2.03%
Sirius Minerals (SXX) 30.90p -1.94%
Vedanta Resources (VED) 731.00p -1.81%
Softcat (SCT) 387.60p -1.77%