London midday: Stocks stay down after retail sales; Intertek bucks trend
London stocks were still in the red by midday on Friday, having taken their opening cue from weakness in the US and Asia, as investors mulled a bigger-than-expected drop in UK retail sales.
The 100 was down 0.4% at 8,305.81.
Russ Mould, investment director at AJ Bell, said: "It’s not been the best of weeks for the FTSE 100, with the UK blue-chip index on track to end the five-day session down 1.7%. Inflation, interest rates, politics, declining commodity prices, rights issues, the list goes on and it is fair to say the market has had quite a bit to worry about.
"Risk appetite has diminished judging by what’s moving on the market. Utility stocks rebounded after yesterday’s sell-off triggered by National Grid’s rights issue and whether a Labour government might nationalise the country’s key utility providers. That was the only sector in demand on Friday, pretty much everything else in the FTSE 100 went into reverse.
"Weak retail figures shouldn’t have surprised given the miserable weather we’ve had for much of 2024. No-one wants to go to the shops if it is pouring with rain and messages from many of the quoted retailers in recent months have implied that life is particularly tough for them, not helped by consumers still feeling the pressure of high interest rates.
"The sooner interest rates are cut, the better, as far as investors are concerned. Not only should that make consumers feel a bit more confident about their finances, but it should also put businesses in a stronger position to increase investment. It could improve investor sentiment and see greater risk-taking. That is all theoretical, nonetheless, and we could easily see a situation where everyone realises that one or two rate cuts aren’t enough to move the dial."
Figures released earlier by the Office for National Statistics showed that retail sales fell by 2.3% in April, following a 0.2% decline in March. That was revised down from its previous estimate of 0.0%.
The ONS attributed the slide to the poor weather, as heavy, persistent rain kept shoppers at home. It said volumes had fallen across most sectors, with clothing, sports equipment, games and toys and furniture stores doing badly.
In total, non-food store sales volumes fell by 4.1%.
In the three months to April, overall sales rose by 0.7% compared to the previous three months, following a weak December 2023.
In the year to April, however, sales were down 2.7%, and remain 3.8% below pre-pandemic levels.
The data bucks more upbeat economic data released recently, including an uptick in consumer confidence, inflation returning to 2.3% and the UK leaving recession following faster-than-expected growth of 0.6%.
Elsewhere, a survey showed that UK consumer confidence sparked in May as households become more upbeat about the economy and their finances.
The latest GfK consumer confidence index, published on Friday, rose two points in May to -17.
Within that, expectations for the general economic situation over the next year increased by four points to -17. The forward-looking personal finance situation also jumped, up five points to 7.
The only sub-measure that fell was the major purchase index, which dipped a point to -26.
Joe Staton, client strategy director at GfK, said: "With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis which has seen the overall index score stuck in the doldrums.
"All-in-all, consumers are clearly sensing that conditions are improving. This good result anticipates further growth in confidence in the months to come."
However, Staton added that the dip in the major purchase index "reinforces the fact that the cost of living crisis is still a day-to-day reality for all of us".
In equity markets, packaging group Mondi gained after an upgrade to ‘buy’ at Citi. The bank said that after a difficult couple of years, the market headwinds of destocking and lower pricing are reversing across Mondi’s product segments (board, flexibles, paper).
Intertek jumped after it backed its full-year expectations as it hailed a strong start to the year, with 7% growth in like-for-like revenue, driven by a strong recovery in the consumer products segment.
Oil services company Wood Group rallied after saying it had rejected a third improved takeover proposal from Dubai-based engineering and consulting company Sidara, saying it continued to "significantly undervalue" the group and its prospects.
Sidara upped its latest offer by 3.8% to 220p-a-share on May 21 from 212p a week ago and the 205p initial approach. It has until June 5 to make a firm bid.
GSK ticked up after a court in Illinois ruled in its favour in the first Zantac case to go to trial.
On the downside, National Grid tumbled again, having fallen sharply on Thursday after saying it was planning a £7bn equity raise through a rights issue.
AJ Bell was under the cosh after founder Andy Bell sold 7.5m shares in the investment platform in a placing at 375p each, raising around £28.1m.
Market Movers
FTSE 100 (UKX) 8,305.81 -0.40%
FTSE 250 (MCX) 20,621.55 -0.05%
techMARK (TASX) 4,836.10 -0.42%
FTSE 100 - Risers
Ocado Group (OCDO) 358.60p 1.85%
Mondi (MNDI) 1,596.00p 1.33%
Intertek Group (ITRK) 5,020.00p 1.33%
Kingfisher (KGF) 261.70p 1.16%
Croda International (CRDA) 4,631.00p 0.81%
Aviva (AV.) 486.20p 0.68%
Weir Group (WEIR) 2,146.00p 0.56%
3i Group (III) 2,942.00p 0.51%
Next (NXT) 9,354.00p 0.49%
GSK (GSK) 1,786.00p 0.45%
FTSE 100 - Fallers
National Grid (NG.) 899.20p -10.53%
St James's Place (STJ) 474.00p -2.87%
Fresnillo (FRES) 593.00p -2.71%
Lloyds Banking Group (LLOY) 54.72p -1.90%
Entain (ENT) 704.80p -1.59%
Experian (EXPN) 3,671.00p -1.40%
RS Group (RS1) 749.50p -1.38%
United Utilities Group (UU.) 1,011.00p -1.27%
Scottish Mortgage Inv Trust (SMT) 889.40p -1.18%
Halma (HLMA) 2,285.00p -1.04%
FTSE 250 - Risers
Travis Perkins (TPK) 862.50p 3.67%
SDCL Energy Efficiency Income Trust (SEIT) 63.90p 3.40%
Plus500 Ltd (DI) (PLUS) 2,216.00p 2.50%
NCC Group (NCC) 142.00p 2.45%
Wood Group (John) (WG.) 184.00p 2.22%
North Atlantic Smaller Companies Inv Trust (NAS) 4,190.00p 2.20%
Derwent London (DLN) 2,260.00p 1.89%
NB Private Equity Partners Ltd. (NBPE) 1,620.00p 1.89%
Energean (ENOG) 1,169.00p 1.65%
Watches of Switzerland Group (WOSG) 401.60p 1.41%
FTSE 250 - Fallers
Hargreaves Lansdown (HL.) 1,067.00p -4.73%
AJ Bell (AJB) 387.50p -3.85%
QinetiQ Group (QQ.) 410.60p -3.25%
Aston Martin Lagonda Global Holdings (AML) 131.70p -3.09%
Diversified Energy Company (DEC) 1,088.00p -2.42%
Jlen Environmental Assets Group Limited NPV (JLEN) 85.00p -2.07%
Kainos Group (KNOS) 1,226.00p -1.92%
Hochschild Mining (HOC) 168.60p -1.75%
Mobico Group (MCG) 57.00p -1.72%
Ferrexpo (FXPO) 44.15p -1.67%