London stocks managed a positive finish on Friday, even after disappointing retail sales data and a slump in consumer confidence, as worries about China’s Evergrande eased and with the release of encouraging UK growth figures.
The FTSE 100 closed the session up 0.2% at 7,204.55, and the FTSE 250 was 0.06% higher at 22,931.66.
Sterling was in negative territory, meanwhile, recently trading down 0.09% on the dollar at $1.3780, and weakening 0.34% against the euro to change hands at €1.1826.
“The FTSE 100 has shaken off much of the negativity of earlier in the week, and is putting its best foot forward in a bid to surpass recent highs,” said IG chief market analyst Chris Beauchamp.
“As with US indices, raw materials and banks are behind the strength in the index, as the success of US earnings season bolsters confidence in other indices and sectors in the hopes that the global economic rebound is still on track.”
On the economic front, a new survey released earlier showed economic growth in the UK gathered pace in October, underpinned by the services sector, as supply shortages hit manufacturing and cost inflation reached a new record high.
The IHS Markit/CIPS flash composite output index, which measures activity in the manufacturing and services sectors, rose to a three-month high of 56.8 from 54.9 September.
That was above consensus expectations for a reading of 54.0, with a reading over 50.0 indicating expansion, while a reading below signals contraction.
The manufacturing output index fell to an eight-month low of 50.6 in October from 52.7 the month before.
That marked the weakest output performance for eight months, with manufacturers highlighting difficulties meeting customer demand due to capacity constraints resulting from lengthy supplier lead times and shortages of staff.
“The UK economy picked up speed again in October, but the expansion is looking increasingly dependent on the service sector, which in turn looks prone to a slowdown amid the recent rise in Covid-19 cases,” said Chris Williamson, chief business economist at IHS Markit.
“Growth is also being accompanied by an unprecedented rise in inflationary pressures, which will inevitably feed through into higher consumer prices in coming months.”
Williamson said the news came at a time when the Bank of England was already leaning towards hiking interest rates to safeguard against inflationary expectations becoming entrenched.
“The record readings of the PMI survey’s price gauges will inevitably pour further fuel on these inflation worries and add to the case for higher interest rates.”
Elsewhere, official data showed UK retail sales falling unexpectedly in September for the fifth month in a row.
The Office for National Statistics said sales were down 0.2% versus expectations for a 0.5% increase, driven by a fall in non-food sales.
It said that made for the longest run of monthly declines in a row since the survey began in 1996, although sales 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.
The ONS said sales at food stores rose 0.6%, while fuel sales grew 2.9% amid panic at the pumps.
Bethany Beckett, UK economist at Capital Economics, said the fall in retail sales volumes in September offered more evidence that the economic recovery was fast running out of steam.
“Indeed, this fall came despite the panic-buying related 2.9% month-on-month rise in petrol sales last month – retail sales volumes excluding fuel fell by 0.6% month-on-month,” Beckett noted.
“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.”
Finally, fresh survey data from GfK showed consumer sentiment dropping sharply amid economic turmoil, as fuel shortages and rising prices began to bite.
The total measure of the research outfit’s consumer confidence barometer dropped to -17 in October, as expected by most economists, from -13 a month earlier, making for 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.
In equity markets, miners ended the day above the waterline, with Antofagasta up 0.49%, BHP ahead 0.65%, and Rio Tinto 0.51% higher, as worries about Chinese property group Evergrande eased following reports that it had made an interest payment due on one of its bonds.
“[This] resulted in some small relief for mining shares, which have been under pressure in recent sessions given the large exposure to China,” said Richard Hunter, head of markets at Interactive Investor.
JD Sports Fashion gained 1.88% after saying it had bought 80% of family-owned Greek firm Cosmos Sport for an undisclosed sum.
National Express rolled 3.41% higher, having fallen earlier in the week after it was given more time to make a bid for rival Stagecoach.
Hochschild Mining was also in the green, advancing 2.81% as gold prices gained.
“Gold prices have rallied above $1,800 and appear to be holding firm after we’ve moved into the US session,” said Oanda analyst Craig Erlam.
“The US PMIs appear to have boosted sentiment early on which has weighed on the dollar and given gold a kick through that big resistance level.
“If it can hold onto the $1,800 handle at the end of the week, it would be a bullish signal.”
On the downside, London Stock Exchange Group fell 5.99% 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 lost 2.92% even after 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.
Premier Inn owner Whitbread was also lower, ending the day down 1.45%.
J Sainsbury was 0.88% 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) 7,204.55 0.20%
FTSE 250 (MCX) 22,931.66 0.06%
techMARK (TASX) 4,585.68 0.00%
FTSE 100 – Risers
Polymetal International (POLY) 1,417.50p 2.94%
Croda International (CRDA) 9,258.00p 2.62%
DCC (CDI) (DCC) 6,224.00p 2.10%
Fresnillo (FRES) 916.60p 1.98%
JD Sports Fashion (JD.) 1,059.00p 1.88%
Mondi (MNDI) 1,805.00p 1.81%
Evraz (EVR) 630.20p 1.61%
Smurfit Kappa Group (CDI) (SKG) 3,688.00p 1.57%
AstraZeneca (AZN) 8,996.00p 1.50%
Flutter Entertainment (CDI) (FLTR) 14,360.00p 1.48%
FTSE 100 – Fallers
London Stock Exchange Group (LSEG) 7,600.00p -5.99%
InterContinental Hotels Group (IHG) 4,850.00p -2.92%
International Consolidated Airlines Group SA (CDI) (IAG) 156.16p -2.56%
Rolls-Royce Holdings (RR.) 135.32p -2.10%
Taylor Wimpey (TW.) 149.35p -1.87%
Auto Trader Group (AUTO) 601.80p -1.67%
Aveva Group (AVV) 3,686.00p -1.58%
Whitbread (WTB) 3,121.00p -1.45%
Associated British Foods (ABF) 1,727.00p -1.43%
Barratt Developments (BDEV) 642.60p -1.26%
FTSE 250 – Risers
Essentra (ESNT) 262.00p 3.93%
Premier Foods (PFD) 111.20p 3.54%
National Express Group (NEX) 224.40p 3.41%
Pets at Home Group (PETS) 482.80p 3.38%
Petropavlovsk (POG) 25.10p 3.04%
Chrysalis Investments Limited NPV (CHRY) 249.00p 2.89%
Hochschild Mining (HOC) 150.20p 2.81%
Ibstock (IBST) 200.00p 2.62%
Baltic Classifieds Group (BCG) 208.00p 2.46%
Endeavour Mining (EDV) 1,875.00p 2.18%
FTSE 250 – Fallers
Micro Focus International (MCRO) 362.10p -4.69%
AO World (AO.) 149.50p -3.92%
Cineworld Group (CINE) 62.30p -3.17%
CMC Markets (CMCX) 263.00p -3.13%
Vistry Group (VTY) 1,165.50p -3.04%
Renishaw (RSW) 5,050.00p -3.01%
Cairn Energy (CNE) 187.80p -2.64%
Auction Technology Group (ATG) 1,346.00p -2.46%
Carnival (CCL) 1,460.40p -2.05%
Wood Group (John) (WG.) 225.80p -2.04%
