(Alliance News) - Stock prices in London opened mixed with the FTSE 100 held back by strength in the pound and declines in the shares of UK lenders after NatWest swung to an annual loss.
The internationally exposed flagship index was down just 6.75 points, or 0.1%, at 6,610.40. The domestic-focused FTSE 250 index was up 30.14 points, or 0.1%, at 20,963.97, and the AIM All-Share index was up 0.2% at 1,209.07.
The Cboe UK 100 index was up 0.1% at 657.81 points. The Cboe 250 was flat at 18,516.02, but the Cboe Small Companies was flat at 12,766.71.
The CAC 40 index in Paris was up 0.2% and Frankfurt's DAX 30 was up 0.3%.
The pound was quoted at USD1.3985 early Friday, up from USD1.3955 at the London equities close Thursday, shrugging off terrible UK retail sales figures.
UK retail sales plunged in January as tighter nationwide coronavirus restrictions closed non-essential shops, the latest figures from the Office for National Statistics showed.
On an annual basis, UK retail sales fell 5.9% in January having posted growth of 3.1% in December. The print missed market consensus, cited by FXStreet, for just a 1.3% drop.
Retail sales plunged 8.2% month-on-month in January having risen 0.4% in December. The monthly change also was worse than consensus of a 2.5% decline.
FTSE 100 retailers Kingfisher and B&M European Value Retail were down 1.2% and 1.0% respectively.
"The period after Christmas is always a difficult time for retailers, and the fact it coincided with the second nationwide lockdown contributed to a sharp 8% fall in sales. This should bounce back rapidly on reopening of the economy, but the pandemic-induced switch to online retail is unlikely to be reversed, posing ongoing challenges for the high street," commented analysts at ING.
In the FTSE 100, SEGRO was up 1.7%. The warehouse property investor raised its dividend after posting positive annual results.
For 2020, pretax profit was GBP1.46 billion, up 62% from GBP902 million in 2019, and adjusted pretax profit was GBP296.5 million, up 11% from GBP267.5 million in 2019.
The company saw a record leasing and asset management performance with GBP77.9 million of new headline rent in 2020, including GBP41.1 million of new pre-let agreements.
SEGRO declared a full-year dividend of 22.1 pence, up 7% from 20.7p paid in 2019.
At the other end of the large-caps, NatWest Group was the worst performer, 1.4% lower, after the state-backed lender posted a swing to loss in 2020 and confirmed it will withdraw from the Republic of Ireland.
For the year ended December 31, NatWest posted a swing to pretax loss of GBP351 million from a profit of GBP4.23 billion in 2019. In the fourth quarter alone, NatWest was managed a profit, but pretax profit came in 96% lower year-on-year at GBP64 million.
Total income - a measure which includes net interest income as well as non-interest income such as fees - was sharply lower in 2020. Total income fell 24% to GBP10.80 billion from GBP14.25 million. In the fourth quarter alone, it was down 43% to GBP2.42 billion.
For 2020, the lender posted impairment losses amounting to GBP3.24 billion, up sharply from GBP696 million in 2019.
NatWest declared a 3.0 pence per share dividend for 2020, following peer Barclays, which on Thursday a 1p dividend plus a share buyback. UK lenders had cancelled final payouts for 2019 under orders from the Bank of England amid the Covid-19 pandemic.
Peers Barclays and Lloyds Banking were 1.1% and 0.7% down, respectively.
In addition, NatWest confirmed it will "begin a phased withdrawal" from the Republic of Ireland, a "multi-year process", while remaining in Northern Ireland.
NatWest - formerly known as Royal Bank of Scotland Group - has agreed to sell a EUR4 billion portfolio of performing commercial loans to Dublin-based AIB Group. The sale remains subject to due diligence.
NatWest is also in early talks with Permanent TSB Group Holdings and others about their potential interest in buying other Ulster retail and small and medium enterprise assets.
Adam Vettese, analyst at eToro commented: "NatWest's balance sheet is showing obvious signs of strain from coronavirus, having dished out 258,000 mortgage repayment holidays to customers last year. Margins have been squeezed to uncomfortably low levels and, like Barclays, NatWest has set aside billions in extra capital to cover a potential spike in bad loans as a result of the pandemic.
"The return of bank dividends is welcome, but it should not be taken as a sign of health in the wider banking sector. Banks are facing some serious headwinds and it could be some time before these ease."
Oil majors BP, Royal Dutch Shell 'A' and 'B' were down 1.0%, 0.9% and 0.8% respectively, tracking spot oil prices lower.
Brent oil was quoted at USD62.98 a barrel Friday morning, sharply lower from USD64.49 late Thursday in London.
"After the oil market skimmed off the worst-case scenario bets embedded into spot and term structures due to the Texas storm price effect, oil prices bounced after a slight downside overshoot. Given the ongoing evidence of recovery in global demand, mostly good news on the Covid-19 trends and robust economic data allowing oil investors to turn their attention to updates on reopening timelines," said Axi's Stephen Major.
In the FTSE 250, Future was the best performer, up 8.5%, after the magazine publisher said it benefited from high levels of online engagement in the first four months ended January 31 - particularly during Black Friday and Christmas.
Looking ahead, the company forecast that profitability for its financial year ending September 30 will materially exceed expectations. For financial 2020, it posted pretax profit of GBP52.0 million on revenue of GBP339.6 million.
The euro was priced at USD1.2101, higher than USD1.2076 at the London equities close on Thursday. Against the yen, the dollar was trading at JPY105.57, lower against JPY105.72.
Gold was trading at USD1,774.09 an ounce, down from USD1,776.28 late Thursday in London.
The Japanese Nikkei 225 index closed down 0.7% on Friday. In China, the Shanghai Composite ended up 0.6%, while the Hang Seng index in Hong Kong finished up 0.2%. The S&P/ASX 200 in Sydney closed down 1.3%.
Consumer prices in Japan stayed in deflationary territory on an annual basis in January, according to figures released by the Statistics Bureau.
Consumer prices fell 0.6% annually in January, though deflation slowed from 1.2% in December. Monthly, consumer prices were 0.6% higher in January.
Japan's private sector showed a marginal improvement in February, but remained in decline, early purchasing manager survey results from au Jibun Bank showed.
Flash estimates showed that Japan's composite output index edged upwards to 47.6 index points in February, up from the final figure of 47.1 points from January, but still below the 50.0 neutral mark.
The flash manufacturing output index rose to 51.3 points in February from the final figure of 49.2 in January, as both output and new orders expanded at the fastest rates seen since December 2018. Business optimism also rose in February, marking the ninth consecutive month of positive sentiment among Japanese manufacturers.
Meanwhile, the flash Japan services business activity index dipped to 45.8 points in February from 47.1 points in January, with the fastest decline in new business activity in nine months.
In the economic calendar for Friday, there are purchasing managers' index readings for Germany, the eurozone and the UK at 0830 GMT, 0900 GMT and 0930 GMT respectively. The US PMI is out at 1445 GMT.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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