London stocks were steady by midday on Friday as investors weighed up disappointing retail sales data against more encouraging business activity figures.
The FTSE 100 was up 0.1% at 6,620.52, while sterling was 0.2% firmer against the dollar at 1.3996, having earlier breached the $1.40 level for the first time since April 2018 amid optimism over the vaccine rollout.
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.
ING economist James Smith said: “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. 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)
“The abrupt switch to online retail during the pandemic is also unlikely to fully reset, having only accelerated a trend that was already there. 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 form 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 Finance Minister 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.
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.
Chris Williamson, chief business economist at IHS Markit, said: “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.
“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.
“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 to 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 both higher.
NatWest moved into the black 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 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 also up after it posted a 10.8% jump in adjusted full-year pre-tax profit.
Opioid addiction treatment maker Indivior fell for the second day running after posting an annual loss on Thursday.
Market Movers
FTSE 100 (UKX) 6,620.52 0.05%
FTSE 250 (MCX) 21,009.20 0.36%
techMARK (TASX) 4,072.11 0.04%
FTSE 100 – Risers
Antofagasta (ANTO) 1,785.50p 4.11%
Rolls-Royce Holdings (RR.) 96.44p 3.32%
Evraz (EVR) 548.20p 3.05%
InterContinental Hotels Group (IHG) 5,110.00p 2.51%
Glencore (GLEN) 295.00p 2.31%
St James’s Place (STJ) 1,216.50p 2.23%
SEGRO (SGRO) 984.00p 2.20%
Johnson Matthey (JMAT) 3,108.00p 2.04%
NATWEST GROUP PLC ORD 100P (NWG) 174.50p 1.87%
Auto Trader Group (AUTO) 614.40p 1.76%
FTSE 100 – Fallers
AstraZeneca (AZN) 7,296.00p -2.12%
Relx plc (REL) 1,778.50p -1.63%
Experian (EXPN) 2,545.00p -1.36%
GlaxoSmithKline (GSK) 1,222.40p -1.34%
Hikma Pharmaceuticals (HIK) 2,361.00p -1.34%
Intertek Group (ITRK) 5,818.00p -1.05%
Avast (AVST) 481.80p -0.99%
Hargreaves Lansdown (HL.) 1,513.50p -0.92%
Kingfisher (KGF) 275.30p -0.83%
Imperial Brands (IMB) 1,409.50p -0.81%
FTSE 250 – Risers
Future (FUTR) 1,970.00p 3.58%
Premier Foods (PFD) 93.70p 3.31%
Apax Global Alpha Limited (APAX) 208.00p 3.23%
easyJet (EZJ) 821.80p 3.01%
Hill & Smith Holdings (HILS) 1,288.00p 2.55%
Carnival (CCL) 1,385.00p 2.52%
TP ICAP (TCAP) 221.80p 2.50%
Ferrexpo (FXPO) 345.80p 2.43%
Greencore Group (GNC) 140.10p 2.41%
Marks & Spencer Group (MKS) 136.15p 2.33%
FTSE 250 – Fallers
Indivior (INDV) 128.50p -7.75%
TBC Bank Group (TBCG) 1,180.00p -3.28%
TI Fluid Systems (TIFS) 266.80p -2.63%
Oxford Biomedica (OXB) 981.00p -2.29%
Ninety One (N91) 217.20p -2.07%
Hochschild Mining (HOC) 208.80p -2.06%
Energean (ENOG) 885.60p -2.00%
PureTech Health (PRTC) 401.00p -1.96%
Centamin (DI) (CEY) 106.90p -1.93%
Vivo Energy (VVO) 87.90p -1.90%
