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(Alliance News) - Stock prices in London opened higher on Friday morning, despite UK retail sales unexpectedly falling in December and consumer confidence dropping to a historic low, with miners and oil companies again providing a much-needed lift to the FTSE 100.
The large-cap index opened up 22.01 points, or 0.3%, at 7,769.72. The FTSE 250 was up 13.22 points, or 0.1%, at 19,587.33, and the AIM All-Share was up 2.05 points, or 0.2%, at 854.14.
The Cboe UK 100 was up 0.3% at 777.75, the Cboe UK 250 was flat at 17,101.07, and the Cboe Small Companies was up 0.3% at 13,626.58.
UK retail sales volumes are estimated to have fallen by 1.0% in December from November. Retail sales fell by 0.5% in November from October, revised from a monthly decline of 0.4%.
Markets had expected retail sales volumes to rise by 0.5% monthly in December, according to FXStreet.
The ONS said December's sales volumes were 1.7% below their pre-pandemic level in February 2020.
"Many of the cost pressures bearing down on retailers and their customers remain in 2023, with high energy costs, the war in Ukraine, and domestic labour shortages all taking their toll. However, BRC modelling suggests the situation will improve in the second half of the year," said Helen Dickinson, chief executive of British Retail Consortium.
The data came as GfK's long-running consumer confidence index dropped three points in January to minus 45, a near-historic low, after a short-lived and weak rally at the end of 2022.
The pound was quoted at USD1.2369 at early on Friday morning in London, firm on USD1.2363 at the equities close on Thursday.
ING's Francesco Pesole said that while the UK economy is still showing signs that it is headed for recession through 2023, ongoing pressure in wages and core services inflation suggest the Bank of England is on course for a final 50 basis point rate hike in February.
Stocks in London were buoyed by another strong stock performance for miners and oil majors, as commodity prices rose amid an improved demand outlook as a result of China's re-opening from Covid-19 lockdowns.
Brent oil was quoted at USD87.04 a barrel at early in London on Friday, up from USD85.36 late Thursday. Gold was quoted at USD1,935.39 an ounce, sharply higher against USD1,919.03.
Among miners, Fresnillo was up 1.7%, Rio Tinto up 1.2%, and Anglo American up 0.9%. Among oil producers, Shell and BP were up 1.3% and 1.5%, respectively.
For the rise in oil prices, Sophie Lund-Yates at Hargreaves Lansdown also pointed to International Energy Agency saying global consumption is set to reach a record daily average this year, amid supply concerns caused by tighter Russian sanctions.
Also in the FTSE 100, SSE was up 1.9% after the electricity utility increased its adjusted earnings per share expectations for financial year 2023 ending March 31.
SSE now expects adjusted earnings of 150 pence, up 25% from the previously anticipated 120p and 57% higher than the 95.4p recorded in financial year 2022.
SSE said it was on track to deliver "record investment" of over GBP2.5 billion in its current financial year. To allow for an increase in investment, SSE will reduce its dividend from financial year 2024 onward.
For financial year 2023, SSE intends to pay a dividend of 85.7p per share plus retail price index, compared to 85.7p paid for financial year 2022. From financial year 2024, this is set to rebase to 60p per share, with anticipated dividend increase of 5% per year for financial years 2025 and 2026.
Hargreaves Lansdown was the worst blue-chip performer in early morning trade, dropping 2.6%, after Jefferies cut the investment fund supermarket to 'underperform' from 'hold'.
In the FTSE 250, Asos jumped 6.9% as Bofa raised the online fashion retailer to 'buy' from 'underperform'.
4imprint rose 4.1%. The promotional products marketer said it anticipates revenue and pretax profit at the upper end of guidance in 2022.
For 2022, 4imprint expects revenue of USD1.14 billion, up 45% from USD787 million a year prior. Pretax profit is also expected at the upper end of analyst forecasts, at no less than USD100 million.
Close Brothers dropped 13%. The merchant bank said it expects to recognise an additional provision in its interim financial statements against the Novitas loan book of up to GBP90 million.
In 2021, Close Brothers decided to permanently cease the approval of lending to new customers across all the products offered by Novitas and withdraw from the legal services financing market.
Elsewhere in London, De La Rue shares fell 7.8% after it announced that the Central Bureau of Investigation in India has launched an investigation into the conduct of Arvind Mayaram, the former Indian Finance Secretary, in which the historical activities of the firm in India, prior to 2016, have been implicated.
De La Rue said it believes that there is no merit to the allegations that relate to the firm, and is seeking legal advice in this regard.
De La Rue also said it is suspending banknote printing operations in Kenya amid reduced demand.
In European equities on Friday, the CAC 40 index in Paris was up 0.4%, while the DAX 40 in Frankfurt was 0.3% higher.
Producer prices in Germany continued their monthly decline in December, according to figures released by Destatis.
In December, the index of producer prices for industrial products fell by 0.4% from November. Prices fell by 3.9% in November from October. Markets had expected producer prices to fall by 1.2%, according to FXStreet.
In 2022 as a whole, the annual average index of producer prices for industrial products increased by 33% compared to the average index of 2021. This was the highest full-year price increase since the start of the survey in 1949, according to the Federal Statistical Office.
The euro stood at USD1.0846 early Friday, higher against USD1.0795 late Thursday. Against the yen, the dollar was trading at JPY128.85, higher compared to JPY128.45.
In Tokyo on Friday, the Nikkei 225 index closed 0.6% higher, despite a report showing Japan's consumer prices rose by 4.0% in December from a year earlier, a pace of inflation not seen since December 1981.
The acceleration comes after a 3.7% increase in prices in November, and the data from the internal affairs ministry showed inflation for the 2022 calendar year stood at 2.3%.
The figures were released days after Japan's central bank again opted to leave its ultra-easy monetary policy intact, bucking the trend set by other major central banks, which have hiked rates to tackle rising prices.
In China, the Shanghai Composite closed up 0.8%, while the Hang Seng index in Hong Kong was up 1.8%. The S&P/ASX 200 in Sydney closed up 0.2%.
New York ended lower on Thursday, with the Dow Jones Industrial Average ending down 0.8%, the S&P 500 down 0.8% and the Nasdaq Composite down 1.0%.
Federal Reserve Vice Chair Lael Brainard said on Thursday that interest rates will need to remain high for some time even as inflation eases, vowing the central bank plans to "stay the course" in fighting price increases.
"Even with the recent moderation, inflation remains high, and policy will need to be sufficiently restrictive for some time," Brainard said in prepared remarks for an event in Chicago. This is to ensure inflation returns to 2% on a sustained basis, she said.
The US Federal Reserve has raised the benchmark lending rate rapidly from around zero to 4.25% to 4.50% in the past year. Brainard's latest remarks suggest rates will have to stay high for a while longer.
Still to come on Friday's economic calendar, Ireland will publish its wholesale price index at 1100 GMT.
By Heather Rydings, Alliance News senior economics reporter
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