LONDON MARKET MIDDAY: FTSE 100 Sinks As Retail And Travel Stocks Drop

(Alliance News) - London stocks were deep in the red at midday on Friday after disappointing economic data out of the UK, with blue-chip retailers among the worst performers in the FTSE 100.

The FTSE 100 index was down 50.10 points, or 0.8%, at 6,665.32 on Friday. The mid-cap FTSE 250 index was down 211.28 points, or 1.0%, at 20,582.44. The AIM All-Share index was down 0.6% at 1,191.50.

The Cboe UK 100 index was down 0.9% at 662.53. The Cboe 250 was down 1.4% at 17904.22, and the Cboe Small Companies down 1.0% at 12256.47.

"The optimism of earlier in the week has evaporated, and indices across Europe are suffering losses this morning," said Chris Beauchamp, chief market analyst at IG.

He said: "Weaker services PMI readings and the prospect of a total UK travel ban have seen the leisure and travel sectors hit, as the outlook for the global economy continues to darken."

UK Prime Minister Boris Johnson is due to lead a Downing Street press conference at 5pm London time.

UK purchasing managers' index data out on Friday came in well below expectations.

The composite purchasing managers' index tumbled to an eight-month low of 40.6 points in January from 50.4 in December. Any reading above 50 indicates expansion and one below, contraction - signalling growth went into reverse in January after just meagre expansion in December.

Worst hit by the latest restrictions was the UK's key service sector, recording a PMI score of just 38.8 points, plunging from December's 49.4. The manufacturing industry fared slightly better, remaining in growth territory in January with a PMI of 52.9, down from 57.5 in December.

Both the services and manufacturing readings severely undershot forecasts. Consensus, according to FXStreet, had seen a services PMI of 45.0 for January and a manufacturing reading of 54.0.

Sterling was quoted at USD1.3667 midday Friday, lower than USD1.3732 at the London equities close on Thursday.

There was also dire news from the UK retail sector.

UK retail sales increased 0.3% month-on-month in December - rebounding from a 4.1% slide in November - which resulted in an increase of 2.7% when compared with February's pre-pandemic level. Market consensus, according to FXStreet, had pencilled in a 1.2% increase.

Clothing stores reported a monthly sales surge of 22%, rebounding from a large fall in November, when non-essential stores were closed during England's second national lockdown. They are closed again currently for a third lockdown.

In 2020 as a whole, UK retail sales fell an estimated 1.9% when compared with 2019, the largest year-on-year fall since records began in 1997, the ONS said.

In the wake of the disappointing UK retail sales figures, FTSE 100-listed clothing sellers Next and Associated British Foods were both down 2.8% at midday. Next PLC said late Thursday it would not come to the rescue of Arcadia Group as it withdrew its interest in acquiring the Topshop owner.

The worst performer in the FTSE 100 Friday, however, was British Airways owner International Consolidated Airlines.

"As there is talk that international travel might be impacted, it is no surprise that airlines are suffering this morning," said David Madden at CMC Markets.

IAG shares were down 4.8%, while Tui and easyJet in the FTSE 250 were down 16% and 4.8% respectively at midday.

Elsewhere in the FTSE 250, Kainos rose 20% after it said it anticipates results for its current financial year will be ahead of current market expectations.

The information technology consulting and software provider noted continued momentum has driven a strong trading performance thus far in its financial year ending March 31.

Looking ahead, the London-based company said it is well-positioned for further growth and remains confident in its strategy.

Cineworld shares fell 4.2%. The latest James Bond film instalment 'No Time To Die' will be delayed again, according to a statement on the film's website.

The film was originally scheduled for release in April 2020, but was first pushed back to November as a result of the pandemic. In October, the movie's release was pushed out to April 2021, and has now been delayed for a third time.

The news will come as a further blow to cinema chain operators, such as Cineworld Group, as a string of big-budget Hollywood film releases have been pushed back due to the coronavirus.

Mediclinic was down 3.6% after saying revenue was up in the third quarter of its financial year, driven by unusually high inpatient levels in southern Africa and the Middle east.

The Stellenbosch, South Africa-headquartered private healthcare provider said that for the third quarter ended December 31 revenue increased by 2.5% compared to the prior year.

However, Mediclinic said it remains "cautious" with regards to the full impact of the global pandemic on the near-term operating performance of the company.

In mainland Europe, the CAC 40 in Paris was down 1.3% while the DAX 30 in Frankfurt was 1.1% lower on Friday.

Out in the morning, the eurozone's private sector sank deeper into contraction territory in January, the third month of decline in-a-row.

Compiler IHS Markit said the flash eurozone composite output index fell to a two-month low of 47.5 points in January from the final 49.1 reading in December. A number below 50.0 points denotes contraction so the figures suggest the decline in single currency bloc's private sector quickened in January.

The euro traded at USD1.2181 after the data, up on USD1.2151 late Thursday.

Stocks in the US are set to join Europe in the red at the opening bell. The Dow Jones is called down 0.9%, the S&P 500 down 0.8% and the Nasdaq Composite down 0.6%.

US flash manufacturing and services PMIs are due at 1445 GMT.

Against the yen, the dollar rose to JPY103.67 midday Friday in London from JPY103.53 at the London equities close on Thursday.

Gold was quoted at USD1,849.70 an ounce on Friday, lower than USD1,864.60 late Thursday in London. Brent oil was trading at USD54.84 a barrel, down from USD56.05 late Thursday.

By Lucy Heming; lucyheming@alliancenews.com

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