London stocks were firmly in the red by midday on Friday, weighed down by inflation concerns and disappointing retail sales data.
The FTSE 100 was down 0.8% at 7,093.03, while sterling was off 0.1% at $1.3903 amid continued dollar strength and as figures from the Office for National Statistics showed retail sales unexpectedly fell in May as restaurants reopened and people shifted some of their spending from food stores, although they remained above pre-pandemic levels.
Retail sales declined by 1.4% on the month, versus expectations for a 1.5% increase. Sales at food stores saw the biggest drop, with volumes down 5.7% as the hospitality industry reopened after Covid restrictions eased and people returned to eating and drinking in pubs and restaurants.
Meanwhile, clothing and department stores reported monthly declines of 2.5% and 6.7%, respectively, while sales at non-store retailers fell 4.2% as non-essential retail reopened.
Despite the overall monthly fall, the ONS said that over April and May combined, retail sales were still 7.7% higher than in March 2021, and 9.1% above where they were in February 2020, before the impact of the coronavirus pandemic.
Paul Dales, chief UK economist at Capital Economics, said: “Rather than suggest the economic recovery is already spluttering, the decline in retail sales in May is probably just a result of the reopening of indoor hospitality in mid-May prompting households to spend less time shopping and more time socialising.”
Worries about inflation also weighed on sentiment. IG market analyst Joshua Mahony said: “European markets are heading towards the weekend on the back foot, with declines for the likes of the Dow and S&P 500 highlighting the ongoing concerns that rising inflation could soon curtail the expansive monetary policy mix around the world.
“Despite promises that central banks will remain accommodative, we are evidently moving towards a phase which will become increasingly dominated by attempting to quantify just how long we have left until the pendulum starts to swing back towards monetary tightening.”
In equity markets, internationally-focused consumer goods giant Reckitt Benckiser was the worst performer on the index as sterling lost ground.
Supermarket group Tesco was weaker after it revealed a slowdown in first-quarter sales as coronavirus pandemic restrictions were lifted and people started to eat out more.
On the upside, precious metals miners Fresnillo and Polymetal shone as gold prices rose.
Safety equipment specialist Halma recovered, having slumped on Thursday after Berenberg said the stock’s valuation “remains a hurdle”.
Car dealership Inchcape rallied as it said full-year pre-tax profit was set to be “significantly ahead” of market consensus of £216m after a better-than-expected performance in the first half.
Rotork was boosted by an upgrade to ‘overweight’ at Morgan Stanley, while easyJet and Wizz Air were lifted by upgrades to ‘buy’ and ‘hold’ respectively at HSBC.
FTSE 100 (UKX) 7,093.03 -0.84%
FTSE 250 (MCX) 22,526.14 -0.04%
techMARK (TASX) 4,487.93 -0.25%
FTSE 100 – Risers
Fresnillo (FRES) 832.00p 3.33%
Halma (HLMA) 2,754.00p 1.18%
Polymetal International (POLY) 1,614.00p 1.06%
Aveva Group (AVV) 3,640.00p 1.00%
Scottish Mortgage Inv Trust (SMT) 1,248.50p 0.69%
SEGRO (SGRO) 1,102.00p 0.69%
Spirax-Sarco Engineering (SPX) 13,335.00p 0.45%
Admiral Group (ADM) 3,214.00p 0.41%
Auto Trader Group (AUTO) 631.00p 0.38%
Evraz (EVR) 606.40p 0.36%
FTSE 100 – Fallers
Reckitt Benckiser Group (RKT) 6,405.00p -3.17%
Johnson Matthey (JMAT) 3,040.00p -3.12%
Melrose Industries (MRO) 160.95p -2.90%
Royal Dutch Shell ‘B’ (RDSB) 1,377.60p -2.88%
BT Group (BT.A) 200.30p -2.58%
Tesco (TSCO) 225.70p -2.36%
Royal Dutch Shell ‘A’ (RDSA) 1,430.60p -2.28%
Mondi (MNDI) 1,893.00p -2.17%
BP (BP.) 317.60p -1.99%
Barclays (BARC) 175.52p -1.85%
FTSE 250 – Risers
Wizz Air Holdings (WIZZ) 5,026.00p 3.91%
Inchcape (INCH) 791.00p 3.74%
Baillie Gifford US Growth Trust (USA) 328.50p 2.82%
Workspace Group (WKP) 874.50p 2.28%
JPMorgan European Discovery Trust (JEDT) 498.00p 2.26%
Network International Holdings (NETW) 397.80p 2.00%
Herald Investment Trust (HRI) 2,200.00p 1.85%
GCP Infrastructure Investments Ltd (GCP) 97.70p 1.77%
Sirius Real Estate Ltd. (SRE) 106.40p 1.72%
Assura (AGR) 77.70p 1.70%
FTSE 250 – Fallers
Cairn Energy (CNE) 156.90p -4.68%
Dr. Martens (DOCS) 421.20p -3.88%
Energean (ENOG) 750.00p -3.78%
Watches of Switzerland Group (WOSG) 825.00p -3.28%
TI Fluid Systems (TIFS) 305.00p -3.17%
Telecom Plus (TEP) 1,180.00p -3.12%
Tullow Oil (TLW) 59.90p -2.89%
Aston Martin Lagonda Global Holdings (AML) 1,895.00p -2.82%
Restaurant Group (RTN) 124.20p -2.82%
Diversified Energy Company (DEC) 103.60p -2.81%