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London close: Stocks in the green after another volatile week

London stocks closed in positive territory on Friday, after sentiment was boosted by China cutting one of its key interest rates, as investors pored over better-than-expected retail sales data but a grim reading on consumer confidence.
The FTSE 100 ended the session up 1.19% at 7,389.98, and the FTSE 250 was ahead 0.75% at 19,835.95.

Sterling was also in the green, last rising 0.17% on the dollar to $1.2488, and strengthening 0.36% against the euro to €1.1824.

“In a complete contrast to yesterday’s large declines, European markets have rebounded strongly as we come to the end of a volatile and whiplash-inducing trading week,” said CMC Markets analyst Michael Hewson.

“At one point this week we were looking down the barrel of some fairly sizeable losses, however today’s rebound has helped mitigate most, if not all of this week’s losses, on both the FTSE 100 and the German DAX.”

Hewson said Friday’s recovery was helped by a strong lead from Asian markets, after China’s central bank cut its five-year rate in an attempt to kick start an economy that was slowing sharply due to various Covid-19 restrictions.

“This morning’s move wasn’t entirely unexpected; however, it’s difficult to understand how it will help an economy that is slowing by design … by a government that is deliberately crimping economic activity due to a restrictive zero-Covid policy.”

On the economic front, figures from the Office for National Statistics showed UK retail sales rising unexpectedly in April, underpinned in part by an increase in food store sales.

Retail sales were up 1.4% following a 1.2% decline in March, and versus expectations for a 0.2% drop.

Compared with pre-Covid February 2020 levels, sales were ahead by 4.1%.

Food store sales were up 2.8%, mostly due to higher spending on alcohol and tobacco in supermarkets, the ONS said.

Fuel sales rose 1.4% on the month, meanwhile, while sales at non-food stores were 0.6% lower.

“April’s rise was driven by an increase in supermarket sales, led by alcohol and tobacco and sweet treats, with off-licences also reporting a boost, possibly due to people staying in more to save money,” said ONS deputy director for surveys and economic indicators Heather Bovill.

The consumer outlook was far more gloomy, however, with a long-running survey showing consumer confidence in the UK dipping even further in May to reach the lowest overall confidence score since records began.

The GfK consumer confidence index decreased two points to -40 in May – the lowest score since the survey started in 1974.

Four of the index’s five measures were down from April, although one – personal finance situation over the next 12 months – was up.

“The consumer confidence barometer recorded a headline score of -40 in May, the worst since our records began in 1974,” said Joe Staton, client strategy director at GfK.

“This comes as UK unemployment hits a 50-year low with vacancies outnumbering job seekers for the first time, and inflation peaking at a 40-year high driven by soaring food and fuel bills.”

On the continent, German producer prices rose at their highest annual pace in April as the war in Ukraine pushed up energy prices, according to figures released by Destatis.

Producer prices for industrial products jumped 33.5% on the same month a year ago, while on the month, prices were up 2.8% in April.

“Mainly responsible for the increase of producer prices compared to April 2021 still was the price increase of energy,” Destatis said.

Sentiment was lifted earlier in the day after the People’s Bank of China cut a key lending benchmark by the most on record, as it looked to support a slowing economy and slumping housing demand.

Beijing’s central bank cut the five-year loan prime rate – its mortgage reference rate – by a bigger-than-expected 15 basis points to 4.45%, and left the one-year rate unchanged at 3.7%.

Analysts had been expecting a five basis points reduction across both tenures.

“The Chinese housing market has been under pressure for several months and both home sales and prices are declining,” said analysts at Danske Bank.

“Additionally, the rest of the economy is under pressure from Covid-19 lockdowns.

“Unlike Western central banks, PBoC is in easing mode, which eventually should support global growth, all else equal.”

On London’s equity markets, Asia-focused insurer Prudential was up 2.95% after the interest rate cut in China, while cybersecurity firm Darktrace surged 6.79% after US peer Palo Alto lifted its full-year guidance.

Merchant banking group Close Brothers was in the black by 0.75% after it said it had performed well in the third quarter.

Croda rallied 2.75% after it backed its full-year expectations and said trading in 2022 had been strong, with continued sales and profit growth across the group.

Gambling software developer Playtech jumped 6.73% after it said talks with TTB Partner were still ongoing and “progress continues to be made”, but added that it was “conscious that TTB has been considering a possible offer for Playtech for 15 weeks”.

In broker note action, easyJet ascended 3.15% after Bank of America Merrill Lynch reiterated its ‘buy’ rating on shares of the budget airline.

BofA said easyJet struck a bullish tone on the outlook for summer in its earnings call on Thursday.

It pointed out that summer bookings had trended at 13% above 2019 levels for the past 10 weeks, with yields up 15% versus two years ago.

Outside the FTSE 350, shares in online retailer THG rocketed 24.52% after it rejected a £2.1bn takeover approach from Belerion Capital Group and King Street Capital Management late on Thursday.

The company, formerly known as The Hut Group, was also in the sights of property tycoon Nick Candy’s Candy Ventures, which was weighing up a £1.4bn bid.

Reporting by Josh White at Sharecast.com. Additional reporting by Michele Maatouk and Frank Prenesti.

Market Movers

FTSE 100 (UKX) 7,389.98 1.19%
FTSE 250 (MCX) 19,835.95 0.75%
techMARK (TASX) 4,358.97 1.64%

FTSE 100 – Risers

Royal Mail (RMG) 315.40p 5.13%
Halma (HLMA) 2,157.00p 3.70%
3i Group (III) 1,221.50p 3.69%
Abrdn (ABDN) 185.50p 3.69%
ITV (ITV) 71.74p 3.46%
St James’s Place (STJ) 1,227.00p 3.24%
Entain (ENT) 1,402.00p 3.09%
Flutter Entertainment (CDI) (FLTR) 9,160.00p 3.08%
BT Group (BT.A) 185.00p 3.01%
RS Group (RS1) 909.00p 2.94%

FTSE 100 – Fallers

Scottish Mortgage Inv Trust (SMT) 737.00p -3.03%
Sainsbury (J) (SBRY) 232.70p -1.81%
Imperial Brands (IMB) 1,786.00p -1.81%
B&M European Value Retail S.A. (DI) (BME) 422.40p -1.52%
Standard Chartered (STAN) 586.60p -0.68%
JD Sports Fashion (JD.) 121.50p -0.57%
Burberry Group (BRBY) 1,586.00p -0.53%
Rolls-Royce Holdings (RR.) 82.71p -0.39%
Barclays (BARC) 152.72p -0.37%
Next (NXT) 6,130.00p -0.26%

FTSE 250 – Risers

Countryside Partnerships (CSP) 243.00p 6.86%
Darktrace (DARK) 363.10p 6.79%
Playtech (PTEC) 537.00p 6.34%
Bridgepoint Group (Reg S) (BPT) 285.00p 4.47%
Genus (GNS) 2,684.00p 4.03%
IP Group (IPO) 82.20p 3.98%
Chrysalis Investments Limited NPV (CHRY) 125.80p 3.97%
Indivior (INDV) 314.20p 3.63%
SSP Group (SSPG) 234.80p 3.48%
TBC Bank Group (TBCG) 1,320.00p 3.45%

FTSE 250 – Fallers

Discoverie Group (DSCV) 710.00p -4.05%
Coats Group (COA) 75.40p -3.83%
Baillie Gifford US Growth Trust (USA) 155.00p -3.13%
Abrdn Private Equity Opportunities Trust (APEO) 454.00p -2.99%
Carnival (CCL) 976.20p -2.96%
Auction Technology Group (ATG) 906.00p -2.79%
Euromoney Institutional Investor (ERM) 1,016.00p -2.50%
TUI AG Reg Shs (DI) (TUI) 204.00p -2.49%
Hipgnosis Songs Fund Limited NPV (SONG) 110.80p -2.29%
Clipper Logistics (CLG) 835.00p -2.22%

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