London open: Stocks rise as investors digest retail sales

At 0825 BST, the FTSE 100 was 0.5% higher at 7,006.14.

Figures released earlier by the Office for National Statistics showed retail sales rose between May and June, helped along by the Euros. Sales were up 0.5%, coming in a touch above consensus expectations for 0.4% growth. Compared with their pre-pandemic February 2020 levels, sales were 9.5% higher.

The largest contribution came from food stores, which saw sales volumes rise 4.2%. The ONS said anecdotal evidence suggested the increase was linked to the start of the Euro 2020 football championship.

On the other hand, non-food stores saw sales volumes drop 1.7%, which was their first fall on the month since January 2021.

Meanwhile, fuel sales increased 2.3% from May as people travelled more thanks to easing restrictions, but remained 2.1% below their pre-pandemic levels.

ONS director of Economic Statistics Darren Morgan said: "June’s retail sales have picked up again following the dip seen last month, with the main driver coming from food and drink sales, boosted by football fans across Britain enjoying the Euros.

"Although not quite back to their pre-pandemic level, fuel sales rose again this month, as people increased the amount they travel so are spending more at the pump."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the temporary boost to food spending from the Euros will fade, while higher confidence does not appear to be translating to higher levels of economic activity, due to the recent rise in Covid-19 cases.

"Indeed, footfall at retail locations has trended down recently and last week was 75% of its level two years ago, down from the peak of 86% in the first week of June, according to Springboard. Similarly, credit and debit card payments settled through the CHAPS system were 4.2% below their February 2020 level in the first 15 days of July, worse than the 2.3% shortfall seen in the first 15 days of June.

"Meanwhile, the combination of a further rise in CPI inflation, a decline in the value of Universal Credit payments at the end of September and a fall in employment in Q4 after the furlough scheme has been wound down will weigh on confidence and real disposable incomes. With consumers also likely to rotate back towards spending on services, it remains difficult to see how retail sales could sustainably exceed June’s level in the second half of 2021."

In equity markets, Ultra Electronics surged 33% after the defence company said it was minded to recommend a £2.58bn takeover bid from Cobham to shareholders. Cobham, owned by US private-equity firm Advent International, has offered £35 a share, a 42% premium to Ultra’s share price of £24.70 on Thursday.

Telecoms operator Vodafone rallied after it reported a rise in first-quarter revenue as European and African services returned to growth.

Beazley was a high riser after the insurer said it swung to a profit in the first half of the year as premium rates improved across its divisions, while wealth manager Brewin Dolphin traded up as it reported an increase in quarterly net inflows.

Mr Kipling and Bisto owner Premier Foods also advanced as it said full-year adjusted pre-tax profit was set to be at the top end of its expectations after "a very encouraging start to the year".

Market Movers

FTSE 100 (UKX) 7,006.14 0.54%
FTSE 250 (MCX) 22,824.43 0.65%
techMARK (TASX) 4,447.58 0.61%

FTSE 100 - Risers

Vodafone Group (VOD) 120.38p 3.50%
Rolls-Royce Holdings (RR.) 98.44p 2.61%
Anglo American (AAL) 2,966.00p 1.62%
3i Group (III) 1,281.50p 1.58%
Glencore (GLEN) 316.60p 1.56%
Land Securities Group (LAND) 698.60p 1.34%
Melrose Industries (MRO) 157.80p 1.29%
Prudential (PRU) 1,376.50p 1.25%
NATWEST GROUP PLC ORD 100P (NWG) 197.95p 1.24%
British Land Company (BLND) 513.20p 1.23%

FTSE 100 - Fallers

Royal Mail (RMG) 528.40p -0.71%
Reckitt Benckiser Group (RKT) 6,180.00p -0.71%
Aviva (AV.) 388.80p -0.44%
Unilever (ULVR) 4,060.00p -0.30%
Sainsbury (J) (SBRY) 280.70p -0.14%
Kingfisher (KGF) 374.10p -0.13%
GlaxoSmithKline (GSK) 1,409.60p -0.07%
WPP (WPP) 949.20p -0.06%
Weir Group (WEIR) 1,869.00p 0.00%
Pershing Square Holdings Ltd NPV (PSH) 2,620.00p 0.00%

FTSE 250 - Risers

Beazley (BEZ) 376.60p 6.32%
Elementis (ELM) 159.90p 4.85%
Cineworld Group (CINE) 67.36p 4.00%
Airtel Africa (AAF) 85.00p 3.47%
Great Portland Estates (GPOR) 752.50p 2.59%
Brewin Dolphin Holdings (BRW) 362.00p 2.55%
Derwent London (DLN) 3,605.00p 2.50%
Meggitt (MGGT) 440.10p 2.19%
IG Group Holdings (IGG) 872.00p 2.15%
Just Group (JUST) 97.50p 2.03%

FTSE 250 - Fallers

Indivior (INDV) 153.00p -1.03%
Centrica (CNA) 48.81p -0.85%
FDM Group (Holdings) (FDM) 1,136.00p -0.71%
Vivo Energy (VVO) 104.20p -0.57%
Fidelity China Special Situations (FCSS) 385.00p -0.52%
Trustpilot Group (TRST) 356.20p -0.45%
Synthomer (SYNT) 526.00p -0.38%
4Imprint Group (FOUR) 2,620.00p -0.38%
SSP Group (SSPG) 245.00p -0.37%
Sirius Real Estate Ltd. (SRE) 117.20p -0.34%