London open: FTSE gains as weak retail sales boost rate cut hopes

At 0900 GMT, the FTSE 100 was up 0.6% at 7,501.78.

Figures released earlier by the Office for National Statistics showed that retail sales volumes fell 3.2% on the month in December following a 1.4% increase in November. This marked the worst decline since January 2021 and was much bigger than the 0.5% drop forecast by economists.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: "Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.

"Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost.

"The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years."

Capital Economics said: "Today’s release would subtract around 0.15 percentage points from real GDP growth in December, which increases the chances the economy may have ended 2023 in the mildest of mild recessions.

"Looking ahead, some of the drag from higher interest rates on existing mortgage holders may result in a further modest decline in real consumer spending in Q1. But we think interest rate cuts from June and the further boost to real household incomes from falling inflation will support a recovery in real consumer spending in the second half of this year."

In equity markets, 4imprint Group surged after the promotional merchandise maker said it expected annual earnings to be slightly above forecasts after a strong trading performance during 2023. Group revenue was forecast to rise 16% to $1.33bn with pre-tax profit of at least $140m, slightly above the upper end of the current range of analysts' forecasts and 2022’s $104m.

Endeavour Mining was in focus as it said former chief executive Sébastien de Montessus, who was abruptly sacked earlier this month for serious misconduct, will miss out on $17.6m in bonuses and share awards. Furthermore, the company said it is clawing back an additional $11.5m in share awards and bonuses paid in respect of the past three years' service.

Takeaway delivery company Deliveroo was also in the spotlight as it said annual earnings would be "slightly" ahead of guidance, with gross transaction value (GTV) up 7% year-on-year in the UK and Ireland, despite the cost-of-living crisis.

Outside the FTSE 350, logistics firm Wincanton rocketed after agreeing to be taken private by Ceva Logistics, a subsidiary of French shipping specialist CMA CGM, in a £566.9m deal.

Market Movers

FTSE 100 (UKX) 7,501.78 0.57%
FTSE 250 (MCX) 19,004.00 0.30%
techMARK (TASX) 4,329.60 0.39%

FTSE 100 - Risers

Pershing Square Holdings Ltd NPV (PSH) 3,594.00p 1.76%
Rentokil Initial (RTO) 400.80p 1.60%
Croda International (CRDA) 4,484.00p 1.52%
British American Tobacco (BATS) 2,323.50p 1.51%
Smith & Nephew (SN.) 1,113.00p 1.41%
3i Group (III) 2,356.00p 1.29%
DCC (CDI) (DCC) 5,708.00p 1.13%
Imperial Brands (IMB) 1,904.50p 1.11%
Melrose Industries (MRO) 585.80p 1.10%
Aviva (AV.) 431.70p 1.10%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 252.50p -0.59%
Sage Group (SGE) 1,154.50p -0.52%
Glencore (GLEN) 417.85p -0.48%
Standard Chartered (STAN) 574.80p -0.35%
United Utilities Group (UU.) 1,017.00p -0.34%
Ocado Group (OCDO) 569.60p -0.32%
Associated British Foods (ABF) 2,266.00p -0.18%
Severn Trent (SVT) 2,505.00p -0.16%
Whitbread (WTB) 3,630.00p -0.14%
Kingfisher (KGF) 219.50p -0.14%

FTSE 250 - Risers

4Imprint Group (FOUR) 5,100.00p 10.03%
Syncona Limited NPV (SYNC) 124.80p 3.83%
Centamin (DI) (CEY) 95.75p 2.13%
QinetiQ Group (QQ.) 339.60p 1.80%
Mobico Group (MCG) 84.35p 1.63%
Lancashire Holdings Limited (LRE) 598.50p 1.61%
Fidelity European Trust (FEV) 348.50p 1.60%
BlackRock World Mining Trust (BRWM) 535.00p 1.52%
Watches of Switzerland Group (WOSG) 376.80p 1.45%
Bellevue Healthcare Trust (Red) (BBH) 149.20p 1.36%

FTSE 250 - Fallers

Ferrexpo (FXPO) 82.50p -2.54%
RHI Magnesita N.V. (DI) (RHIM) 3,200.00p -1.96%
Spirent Communications (SPT) 120.90p -1.87%
Diversified Energy Company (DEC) 938.00p -1.78%
Harbour Energy (HBR) 284.70p -1.49%
Hipgnosis Songs Fund Limited NPV (SONG) 70.00p -1.41%
Currys (CURY) 48.78p -1.22%
Vistry Group (VTY) 934.00p -0.95%
Carnival (CCL) 1,224.50p -0.81%
Savills (SVS) 986.50p -0.75%