LONDON MARKET OPEN: FTSE 100 looks to end week on high note

(Alliance News) - Stock prices in London opened mixed on Friday, amid economic gloom in the UK, despite new data showing slight improvements in retail sales and consumer confidence.

The FTSE 100 index opened up 22.92 points, 0.3%, at 7,369.46. The FTSE 250 was down 20.50 points, 0.1%, at 19,101.81 and the AIM All-Share was down 1.78 points, 0.2%, at 833.15.

The Cboe UK 100 was up 0.3% at 736.87, the Cboe UK 250 was down 4.03 points at 16,430.81, and the Cboe Small Companies was up 5.05 points at 12,863.34.

In European equities on Friday, the CAC 40 in Paris was up 0.5%, while the DAX 40 in Frankfurt was up 0.7%.

Sterling strengthened against the dollar, with the pound quoted at USD1.1894 early Friday, higher than USD1.1779 at the London equities close on Thursday.

The euro traded at USD1.0353 early Friday, higher than USD1.0326 late Thursday. Against the yen, the dollar was quoted at JPY140.10, down versus JPY140.61.

UK retail sales performed better than expected in October, according to new data from the Office for National Statistics.

On an annual basis, retail sales fell 6.1% in October, compared to a 6.8% fall in September. The figure was better than the market had expected, with consensus of a 6.5% decline cited by FXStreet.

On a monthly basis, sales grew by 0.6% in October, compared to a 1.5% decline in September. According to FXStreet-cited consensus, sales were expected to remain flat.

"October retail sales offered a brief respite from the economic gloom enveloping the UK as consumers tighten their belts in the face of a brutal cost-of-living crisis," said Ebury's Phil Monkhouse

"A small increase in retail sales in October, though, didn't offset previous weakness in the market with volume falling 2.4% in the three months to October. With the Office for Budget Responsibility forecasting that next year will see the biggest drop in disposable income since records began, 2023 looks set to be an annus horribilis for retailers before the outlook can improve."

In addition, UK consumer confidence rose slightly in November in a probable "collective sigh of relief" after the chaos of the mini-budget but remains at a near-historic low.

GfK's long-running consumer confidence index increased three points to minus 44 with improvements across all measures registering the financial and economic mood of the nation.

Meanwhile, UK Chancellor Jeremy Hunt faces criticism over the credibility of his autumn budget.

Hunt on Thursday set out his plans for GBP55 billion of tax hikes and spending cuts against the backdrop of a bleak set of economic forecasts from the Office of Budget Responsibility, underlining the damage wreaked by the war in Ukraine.

Institute for Fiscal Studies director Paul Johnson questioned whether spending cuts due to kick in after 2025 could be delivered, with services such as the police, the courts and local government facing "a very difficult few years".

"Delaying all of the difficult decisions until after the next general election does cast doubt on the credibility of these plans. The tight spending plans post-2025, in particular, may stretch credulity," he said.

The Resolution Foundation think tank said such cuts were "likely to be undeliverable" as they would require "years of holding down public sector wages below those in the private sector".

In London, insurer Legal & General welcomed the chancellor's references to Solvency II reform in the budget.

The proposals will allow for "greater flexibility to make appropriate investments", it said, "including ones which: develop new infrastructure, contribute to the UK government's levelling-up agenda, and support positive climate outcomes".

L&G backed annual profit, expecting operating profit growth in its full year to be in line with the 8% delivered in the first half, with annual capital generation expected at GBP1.8 billion.

It said its pension risk transfer business has continued to "perform strongly" with recent new business wins. Year-to-date, Legal & General Retirement Institutional has transacted or is in exclusive negotiations on GBP9.3 billion of global PRT business, exceeding the 2021 figure of GBP7.2 billion of global PRT secured.

L&G shares added 3.4% in early trade.

Waste management firm Biffa said its chief financial officer, Richard Pike, has resigned to become finance director at packaging firm DS Smith. Pike's departure date is "expected to be no later than April 30, 2023", and DS Smith said Pike will join with effect from Adrian Marsh's retirement next summer.

Back in September, Biffa agreed to a GBP1.3 billion takeover offer from private equity firm Energy Capital Partners. Earlier this week, it said it expects the deal to complete in the first quarter of next year.

Biffa was up 0.2%, while DS Smith added 0.6%.

FTSE 250-listed Liontrust Asset Management rose 2.5%.

In the six months to September 30, revenue edged up to GBP116.8 million from GBP114.9 million. Pretax profit shrunk to GBP14.1 million from GBP31.1 million, however. This was due to costs of GBP28.8 million relating to acquisition and restructuring costs, as well as other costs. On an adjusted basis, pretax profit rose 9% to GBP42.9 million.

"The company is financially strong, investment processes are robust, the brand profile is high and positive, and there is extensive client engagement," Liontrust said.

It maintained an interim dividend of 22 pence.

Shares in housebuilder MJ Gleeson plunged 9.6%, as it warned of rising cancellations.

Over the past six weeks, Gleeson Homes cancellation rates increased to 41%, from 20% in the first ten weeks of the year.

"The market volatility and sharp increase in interest rates following the mini budget impacted buyer confidence and caused a significant slowdown in demand," the firm said.

However, MJ Gleeson said it is "encouraged" by Thursday's autumn statement, and it expects buyer confidence to recover as the volatile macro-economic backdrop calms down. It said the outlook for its current financial year will depend upon how quickly the housing market recovers.

On AIM, ready meal provider Parsley Box fell 9.1%. The firm proposed cancelling its AIM listing, and re-registering as a private limited company.

This follows a board review of potential sources of capital to fund its medium-term growth plans.

In Asia on Friday, stocks mostly closed lower. The Japanese Nikkei 225 index ended down 0.1%. In China on Friday, the Shanghai Composite was down 0.6%, while the Hang Seng index in Hong Kong was down 0.3%. The S&P/ASX 200 in Sydney closed up 0.2%. 

Gold was quoted at USD1,763.74 an ounce early Friday, higher than USD1,758.92 on Thursday, while Brent oil was trading at USD90.24 a barrel, mostly flat from USD90.02.

By Elizabeth Winter; elizabethwinter@alliancenews.com

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