London open: Stocks edge up as Evergrande worries ease; retail sales disappoint
London stocks edged higher in early trade on Friday as worries about Chinese property group Evergrande eased, but gains were unspectacular following disappointing retail sales and a slump in consumer confidence.
At 0840 BST, the FTSE 100 was up 0.2% at 7,204.18.
Richard Hunter, head of markets at Interactive Investor, said: "Overnight news that Chinese property company Evergrande would be making an interest payment due on one of its bonds to avoid defaulting lifted sentiment, which has also fed through to the UK in opening exchanges.
"This in turn has resulted in some small relief for mining shares, which have been under pressure in recent sessions given the large exposure to China."
On home shores, figures released earlier by the Office for National Statistics showed retail sales unexpectedly fell in September for the fifth month in a row. Sales were down 0.2% versus expectations for a 0.5% increase, driven by a drop in non-food sales. The ONS said this was longest run of monthly declines in a row since the survey began in 1996.
Nevertheless, they remained 4.2% above pre-pandemic levels.
Sales at non-food stores fell 1.4%, with household goods sales down 9.3%, while furniture and lighting stores saw a 14.8% drop in sales. Meanwhile, sales at food stores rose 0.6%, while fuel sales rose 2.9% amid panic at the pumps.
Bethany Beckett, UK economist at Capital Economics, said the fall in retail sales volumes in September offers more evidence that the economic recovery is fast running out of steam.
"Indeed, this fall came despite the panic-buying related 2.9% m/m rise in petrol sales last month; retail sales volumes excluding fuel fell by 0.6% m/m. Given the backdrop of continued shortages and rising Covid-19 infections, we suspect that retail sales growth will continue to be weak in the coming months.
"Overall, the data support our view that the economic recovery stalled in September. Our forecast is for GDP to return to its February 2020 peak in early 2022, but the risk is that the resurgence in Covid-19 cases and continued shortages means that GDP takes longer to reach that landmark."
Separately, a survey from GfK showed that consumer sentiment dropped sharply in October amid economic turmoil including fuel shortages and rising prices.
The total measure of GfK's consumer confidence barometer dropped to -17, as expected by most economists, from -13 in September, in the third month of decline.
All five aspects of the survey fell, led by respondents' view of the economy over the next 12 months, which dropped 10 points to -26 from September and 20 points from August. Households were also less optimistic about their personal finances over the next year and less likely to make a major purchase.
In equity markets, JD Sports Fashion rallied after saying it had bought 80% of family-owned Greek firm Cosmos Sport for an undisclosed sum.
London Stock Exchange was on the back foot after it posted 7.6% growth in third-quarter income but cautioned that supply chain issues could delay some of its technology spending plans.
InterContinental Hotels also lost ground even as it reported a "significant" jump in third-quarter room revenue towards pre-Covid pandemic levels after a rebound in bookings during the summer as travel restrictions were eased.
Sainsbury’s was weaker after saying it had ended talks over the sale of its banking operation, claiming the potential bid did not offer good value for shareholders.
Market Movers
FTSE 100 (UKX) 7,204.18 0.19%
FTSE 250 (MCX) 22,893.95 -0.10%
techMARK (TASX) 4,587.49 0.04%
FTSE 100 - Risers
JD Sports Fashion (JD.) 1,068.50p 2.79%
Croda International (CRDA) 9,172.00p 1.66%
Antofagasta (ANTO) 1,453.50p 1.61%
Rio Tinto (RIO) 4,719.50p 1.52%
Johnson Matthey (JMAT) 2,719.00p 1.34%
Reckitt Benckiser Group (RKT) 5,599.00p 1.17%
Polymetal International (POLY) 1,393.00p 1.16%
Evraz (EVR) 629.80p 1.09%
Unilever (ULVR) 3,903.50p 1.04%
Informa (INF) 527.00p 0.96%
FTSE 100 - Fallers
Whitbread (WTB) 3,084.00p -2.62%
London Stock Exchange Group (LSEG) 7,876.00p -2.57%
Barratt Developments (BDEV) 639.80p -1.69%
InterContinental Hotels Group (IHG) 4,915.00p -1.62%
Taylor Wimpey (TW.) 150.15p -1.38%
International Consolidated Airlines Group SA (CDI) (IAG) 158.16p -1.25%
ITV (ITV) 103.80p -1.19%
Persimmon (PSN) 2,597.00p -1.03%
Sainsbury (J) (SBRY) 293.30p -0.98%
Associated British Foods (ABF) 1,735.50p -0.94%
FTSE 250 - Risers
Baltic Classifieds Group (BCG) 210.00p 3.45%
Baillie Gifford Shin Nippon (BGS) 232.00p 1.98%
Ashmore Group (ASHM) 331.80p 1.90%
Hochschild Mining (HOC) 148.50p 1.64%
Darktrace (DARK) 965.50p 1.63%
SSP Group (SSPG) 249.40p 1.51%
Hipgnosis Songs Fund Limited NPV (SONG) 123.80p 1.48%
Ferrexpo (FXPO) 308.80p 1.38%
Vivo Energy (VVO) 108.00p 1.31%
Greggs (GRG) 3,060.00p 1.29%
FTSE 250 - Fallers
Wood Group (John) (WG.) 223.30p -3.00%
Vistry Group (VTY) 1,178.00p -2.00%
Cairn Energy (CNE) 189.90p -1.56%
Cineworld Group (CINE) 63.34p -1.55%
Micro Focus International (MCRO) 374.20p -1.50%
Centrica (CNA) 58.58p -1.48%
Investec (INVP) 323.20p -1.43%
Wizz Air Holdings (WIZZ) 4,400.00p -1.32%
AO World (AO.) 153.70p -1.22%
Mitchells & Butlers (MAB) 232.20p -1.19%