London stocks closed in positive territory on Friday as investors weighed up disappointing retail sales data against more encouraging business activity figures.
The FTSE 100 ended the session up 0.1% at 6,624.02, and the FTSE 250 was 0.49% firmer at 21.035.96.
Sterling was mixed, last strengthening 0.31% against the dollar to trade at $1.4019, but losing 0.01% on the euro to 1.1557.
“The FTSE 100 ends the week only modestly higher from last Friday, having seen Monday’s surge eroded over the past three sessions, but with heavyweight sectors like banking and mining on the up this afternoon there is hope that the bounce of the past three weeks is more than just a flash in the pan,” said IG chief market analyst Chris Beauchamp.
“That the FTSE 100 can continue to gain despite the invincible nature of sterling’s strength this week is another positive sign, and reinforces the view that traders continue to take a more optimistic view of the UK now that Brexit is out of the way and the vaccine programme is bearing fruit in bringing down the UK’s R rate.”
Figures released earlier by the Office for National Statistics showed UK retail sales slumped in January as tighter nationwide coronavirus restrictions hammered department and clothing stores.
Sales volumes fell 8.2% compared with December, the biggest fall since April, and far more than the 2.5% forecast by economists.
The ONS said the figures reflected the impact of the third national lockdown imposed at the start of the month. Sales were down 5.5% year on year.
“Assuming the spring reopening proves sustainable, and the vaccines succeed in keeping transmission and hospitalisations contained, then consumer spending is likely to rise strongly from spring onwards,” said ING economist James Smith.
“However we think it’s more likely to favour services for obvious reasons, and it’s therefore likely that retailers won’t feel the full benefit – though clothing may be a possible exception.”
Smith said the abrupt switch to online retail during the pandemic was also unlikely to fully reset, having only accelerated a trend that was already extant.
“It’s therefore likely that we’ll see further signs of consolidation on the high street this year, and that may unfortunately contribute to a rise in unemployment in the sector.”
Separate figures from the ONS showed the UK government borrowed another £8.8bn in January, less than the £24.5bn forecast by economists.
Borrowing since the start of the financial year in April now stands at £270.6bn, reflecting the surge in spending and tax cuts introduced by Rishi Sunak to counter the impact of the Covid-19 pandemic.
Market participants were also mulling the latest flash survey from IHS Markit/CIPS, which showed that business activity stabilised in February following a collapse at the start of the year.
The composite purchasing managers’ index – which measures activity in both the manufacturing and services sectors – came in at 49.8 from 41.2 in January, hitting a two-month high and coming in just below the 50.0 mark that separates contraction from expansion.
Meanwhile, the manufacturing PMI fell to a nine-month low of 50.5 in February from 50.7 in January, while the index for the services sector printed at a four-month high of 49.7, compared to 39.5 the month before.
“The UK economy showed welcome signs of steadying in February after the severe slump seen in January, albeit with business activity remaining sharply lower than late-last year due mainly to the ongoing national lockdown,” said Chris Williamson, chief business economist at IHS Markit.
“Although the hospitality sector, including hotels and restaurants, reported a further steep decline, as did the transport and travel sector, rates of contraction eased considerably.
“Business and financial services companies meanwhile recovered to register modest expansions, helping the hard-hit service sector to come close to stabilising.”
Williamson said that In contrast, the manufacturing sector’s performance worsened amid escalating Brexit-related export losses and supply chain disruptions.
“More than half of all companies reporting lower exports attributed the decline to Brexit-related factors. Brexit was also the most commonly cited cause of supply delays.”
In equity markets, miners were on the rise again as metals prices continued to gain, with Antofagasta and Glencore up 7.17% and 2.91%, respectively.
NatWest closed ahead 5.17% following early losses, after the bank said it was pulling out of the Republic of Ireland, reported a smaller-than-expected annual loss and restored its dividend
Future pushed 1.05% higher after the media company said full-year profitability is set to be “materially ahead” of current market expectations after a positive start to the year.
Real estate investment trust Segro was up 1.52% after it posted a 10.8% jump in adjusted full-year pre-tax profit.
On the downside, opioid addiction treatment maker Indivior fell 8.4%, after posting an annual loss on Thursday.
Market Movers
FTSE 100 (UKX) 6,624.02 0.10%
FTSE 250 (MCX) 21,035.96 0.49%
techMARK (TASX) 4,052.64 -0.44%
FTSE 100 – Risers
Antofagasta (ANTO) 1,838.00p 7.17%
Rolls-Royce Holdings (RR.) 98.66p 5.70%
NATWEST GROUP PLC ORD 100P (NWG) 180.15p 5.17%
International Consolidated Airlines Group SA (CDI) (IAG) 165.75p 5.10%
Evraz (EVR) 556.60p 4.62%
Barclays (BARC) 153.94p 4.16%
Glencore (GLEN) 300.15p 4.09%
Anglo American (AAL) 2,870.00p 3.80%
BT Group (BT.A) 131.40p 3.14%
Melrose Industries (MRO) 170.20p 3.09%
FTSE 100 – Fallers
Experian (EXPN) 2,489.00p -3.53%
Reckitt Benckiser Group (RB.) 6,072.00p -3.28%
Intertek Group (ITRK) 5,694.00p -3.16%
AstraZeneca (AZN) 7,226.00p -3.06%
Relx plc (REL) 1,760.50p -2.63%
Rentokil Initial (RTO) 498.50p -2.22%
GlaxoSmithKline (GSK) 1,215.20p -1.92%
Imperial Brands (IMB) 1,394.00p -1.90%
Unilever (ULVR) 3,905.00p -1.61%
Aveva Group (AVV) 3,756.00p -1.57%
FTSE 250 – Risers
Carnival (CCL) 1,438.00p 6.44%
TP ICAP (TCAP) 225.80p 4.34%
Meggitt (MGGT) 412.30p 4.30%
Cineworld Group (CINE) 80.78p 4.21%
easyJet (EZJ) 831.20p 4.19%
Ferrexpo (FXPO) 350.80p 3.91%
Marks & Spencer Group (MKS) 138.10p 3.80%
Hill & Smith Holdings (HILS) 1,298.00p 3.34%
Kaz Minerals (KAZ) 853.60p 3.34%
National Express Group (NEX) 301.80p 3.07%
FTSE 250 – Fallers
Indivior (INDV) 127.60p -8.40%
TBC Bank Group (TBCG) 1,146.00p -6.07%
Pets at Home Group (PETS) 390.00p -3.23%
Spirent Communications (SPT) 239.00p -2.45%
Ninety One (N91) 217.00p -2.16%
Computacenter (CCC) 2,208.00p -2.13%
Biffa (BIFF) 236.50p -2.08%
Clarkson (CKN) 2,600.00p -2.07%
Energean (ENOG) 885.00p -2.07%
St. Modwen Properties (SMP) 375.50p -1.96%
