London open: Stocks rise despite disappointing retail sales, consumer confidence

At 0825 GMT, the FTSE 100 was up 0.4% at 7,781.47.

Figures out earlier from the Office for National Statistics showed that retail sales continued to fall in December, as hard-pressed shoppers cut back on spending.

Sales volumes were estimated to have fallen 1% last month, compounding a 0.5% slide in November, revised downwards from an initial estimate of -0.4%. Analysts had been expecting a 0.5% improvement in sales in December.

Year-on-year, sales fell 5.8%. They were also 1.7% below February 2020, before the pandemic.

The ONS said consumers had cut back on spending because of "increased prices and affordability concerns", while the annual rate was affected by the removal of pandemic restrictions, which led to a return to eating out. Food retailers also suggested customers had stocked up early for Christmas.

Non-food store sales fell by 2.1%, while food stores volumes eased 0.3%.

Online sales, meanwhile, were down 25.4% as heightened pandemic demand continued to wane. The ONS added that there was anecdotal evidence that the Royal Mail strikes had prompted more consumers to shop in-store.

The ONS data contradicts a raft of positive trading updates from retailers over the last week.

Helen Dickinson, chief executive of the British Retail Consortium, said: "The high cost of household bills, particularly for energy, and rising food inflation, made for a difficult Christmas backdrop with falling consumer confidence.

"Nonetheless, increased discounting helped boost gift giving, with stronger sales growth for clothing and furniture."

Elsewhere, the latest survey from GfK showed that consumer confidence faltered in January, as concerns about the strength of the economy weighed heavily.

The January GfK consumer confidence index fell three points to -45, ending December’s weak rally, when the index nudged up two points to -42.

Within that, expectations for the general economic situation over the next 12 months dipped one point to -54, although the outlook for the personal financial situation moved up two points to -27.

Both the major purchase and savings indices fell six points, however, to -40 and 14 respectively.

Joe Staton, client strategy director at GfK, said: "Consumers have a New Year hangover of the economic kind, with high levels of pessimism over the state of the wider economy. And unlike a conventional hangover, this one won’t vanish quickly.

"The only glimmer of hope is the slight uptick in the outlook for [the] personal financial situation, but this is of little comfort as it is still 25 points lower than this time last year.

"With inflation continuing to swallow up pay rises and the prospect of some shocking energy bills landing soon, the forecast for consumer confidence this year is not looking good."

In equity markets, miners were among the top performers after heavy losses a day earlier, with Rio, Glencore and Antofagasta all up.

Power generator SSE was the standout gainer on the FTSE 100, however, after it upgraded annual earnings expectations as higher gas prices and better storage offset lower-than-expected renewables output.

4imprint surged as it said pre-tax profit for 2022 is expected to be above the upper end of the range of analysts' forecasts, and not less than $100m, following a particularly strong finish to the year.

Spirent Communications was sharply lower despite saying it expects to deliver an adjusted operating profit slightly ahead of market consensus, with good earnings growth over 2021.

Close Brothers also slid after the merchant bank said it will be increasing further provisions in the first half financial statements for its Novitas loan book. It also reiterated that the performance at its Winterflood's segment has been hit by the continued market-wide slowdown in trading activity in higher-margin sectors.

Hargreaves Lansdown was knocked lower by a downgrade to ‘underperform’ at Jefferies.

Market Movers

FTSE 100 (UKX) 7,781.47 0.44%
FTSE 250 (MCX) 19,612.88 0.20%
techMARK (TASX) 4,460.85 -0.18%

FTSE 100 - Risers

SSE (SSE) 1,758.50p 3.32%
Endeavour Mining (EDV) 1,981.00p 1.85%
Rio Tinto (RIO) 6,262.00p 1.80%
Glencore (GLEN) 574.00p 1.76%
Flutter Entertainment (CDI) (FLTR) 12,460.00p 1.59%
Prudential (PRU) 1,303.00p 1.56%
Antofagasta (ANTO) 1,749.00p 1.51%
Smurfit Kappa Group (CDI) (SKG) 3,428.00p 1.42%
Shell (SHEL) 2,393.00p 1.38%
Burberry Group (BRBY) 2,334.00p 1.35%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 865.60p -2.46%
Unilever (ULVR) 4,057.50p -0.83%
Halma (HLMA) 2,094.00p -0.66%
Diageo (DGE) 3,667.50p -0.66%
Experian (EXPN) 2,945.00p -0.57%
Bunzl (BNZL) 2,902.00p -0.51%
AstraZeneca (AZN) 11,380.00p -0.35%
Coca-Cola HBC AG (CDI) (CCH) 1,923.00p -0.31%
Next (NXT) 6,384.00p -0.28%
Reckitt Benckiser Group (RKT) 5,824.00p -0.27%

FTSE 250 - Risers

4Imprint Group (FOUR) 4,675.00p 4.47%
Cranswick (CWK) 3,288.00p 3.33%
Darktrace (DARK) 241.30p 2.55%
Aston Martin Lagonda Global Holdings (AML) 166.70p 2.36%
Marshalls (MSLH) 339.80p 2.04%
Tullow Oil (TLW) 37.40p 1.58%
Drax Group (DRX) 664.00p 1.53%
SSP Group (SSPG) 258.00p 1.49%
Carnival (CCL) 731.20p 1.41%
Telecom Plus (TEP) 2,055.00p 1.23%

FTSE 250 - Fallers

Spirent Communications (SPT) 261.40p -5.77%
National Express Group (NEX) 130.20p -2.18%
Dr. Martens (DOCS) 142.00p -2.00%
IntegraFin Holding (IHP) 301.80p -1.95%
Harbour Energy (HBR) 308.00p -1.47%
Redrow (RDW) 514.00p -1.06%
Playtech (PTEC) 534.00p -0.93%
Crest Nicholson Holdings (CRST) 241.80p -0.90%
Tritax Big Box Reit (BBOX) 149.50p -0.86%
AJ Bell (AJB) 338.00p -0.82%