London midday: Stocks push higher as retail sales dent sterling

(Sharecast News) - London stocks had extended gains by midday on Friday as sterling was dented by weak retail sales figures.

The FTSE 100 was up 0.9% at 7,680.33, while the pound was down 0.4% against the dollar at 1.3030 after data from the Office for National Statistics showed that UK retail sales unexpectedly fell in December, adding weight to expectations of a rate cut.

Retail sales declined 0.6% on the month, missing expectations of a 0.5% increase. On the year, meanwhile, sales rose 0.9%, coming in below expectations of a 2.6% jump.

In the three months to December, retail sales fell 1% compared to the previous three-month period, marking the worst fall since March 2017. Food, clothing and department store sales all declined.

ONS head of retail sales Rhian Murphy said: "Retail sales fell sharply in the latest three months with almost all sectors showing a decline.

"The longer-term picture is still one of growth, although it has slowed considerably in recent months.

"December was the fifth consecutive month with no growth as food stores suffered particularly poor sales, showing the steepest fall for three years."

Ayush Ansal, chief investment officer at Crimson Black Capital, said: "In a week that saw GDP data lurch towards stagnation and inflation fall sharply, the market's conclusion is likely to be that the Bank of England will respond with monetary stimulus.

"With the UK economy drifting and no sign yet of a 'Boris bounce' feeding through into consumer confidence, the lack of inflationary pressure could easily persuade the Bank of England that the time is right to inject some zip into the economy with a rate cut, and sterling is likely to recalibrate accordingly.

"A string of major high street names have reported poor sales in what would normally be a boom month, and so the debate about whether December's weakness is the fallout from increased spending in November's Black Friday is pretty moot."

Earlier, data out of China showed the economy grew in 2019 at the slowest pace in nearly 30 years. However, there were some bright spots, as December industrial production, retail sales and fixed asset investment figures all beat market expectations.

Oanda analyst Craig Erlam said: "The phase one trade deal with the US has partially lifted the cloud of uncertainty hanging over the economy, although numerous tariffs remain in place. If these numbers are anything to go by, 2020 could be a far more productive year for the world's second largest economy."

In equity markets, British Airways and Iberia parent IAG flew to the top of the FTSE 100 after ditching its own rule to impose a limit on non-EU shareholders.

UAE healthcare operator NMC Health was a high riser after saying it had appointed a former US federal judge and FBI director to look into allegations made against the company by US research firm Muddy Waters.

Food producer Cranswick rallied after saying it expects full-year adjusted pre-tax profit to be higher than current market forecasts.

Ashtead and British Land were boosted by upgrades at Morgan Stanley and Goldman Sachs, respectively.

On the downside, Hastings was sharply lower after the insurer warned on profits and said it would cut its dividend following elevated claims costs in the fourth quarter. The company also pointed to higher repair and third party credit hire costs, slightly higher winter frequencies than the prior year, and a small number of larger bodily injury losses.

Whitbread was weaker after a downgrade to 'underperform' at Bernstein and TUI retreated after an initiation at 'sell' at Goldman Sachs.

Market Movers

FTSE 100 (UKX) 7,680.33 0.93%
FTSE 250 (MCX) 21,873.39 0.70%
techMARK (TASX) 4,278.09 1.03%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 683.00p 6.99%
NMC Health (NMC) 1,534.00p 6.42%
Ashtead Group (AHT) 2,541.00p 4.61%
Evraz (EVR) 411.20p 4.45%
JD Sports Fashion (JD.) 884.80p 3.24%
Rio Tinto (RIO) 4,659.50p 2.94%
Hikma Pharmaceuticals (HIK) 1,966.00p 2.91%
Aveva Group (AVV) 5,090.00p 2.75%
Anglo American (AAL) 2,234.00p 2.69%
Pearson (PSON) 578.40p 2.66%

FTSE 100 - Fallers

Associated British Foods (ABF) 2,615.00p -1.73%
Kingfisher (KGF) 207.40p -1.19%
Whitbread (WTB) 4,539.00p -1.05%
TUI AG Reg Shs (DI) (TUI) 882.60p -0.94%
Admiral Group (ADM) 2,307.00p -0.73%
Flutter Entertainment (FLTR) 9,128.00p -0.57%
BT Group (BT.A) 182.46p -0.30%
London Stock Exchange Group (LSE) 7,626.00p -0.26%
Burberry Group (BRBY) 2,304.00p -0.26%
Royal Dutch Shell 'B' (RDSB) 2,270.50p -0.11%

FTSE 250 - Risers

Cranswick (CWK) 3,624.00p 6.71%
Games Workshop Group (GAW) 7,075.00p 5.68%
Finablr (FIN) 137.40p 4.89%
Airtel Africa (AAF) 71.90p 4.43%
Fresnillo (FRES) 652.00p 2.97%
Micro Focus International (MCRO) 1,147.40p 2.87%
Dunelm Group (DNLM) 1,164.00p 2.74%
Softcat (SCT) 1,251.00p 2.54%
Moneysupermarket.com Group (MONY) 329.60p 2.49%
Britvic (BVIC) 878.00p 2.39%

FTSE 250 - Fallers

Hastings Group Holdings (HSTG) 173.40p -6.37%
Restaurant Group (RTN) 140.20p -4.88%
Tullow Oil (TLW) 53.78p -2.92%
William Hill (WMH) 183.50p -2.32%
Cineworld Group (CINE) 188.85p -1.64%
Sirius Minerals (SXX) 5.38p -1.28%
Bank of Georgia Group (BGEO) 1,600.00p -1.23%
Galliford Try (GFRD) 144.18p -1.23%
BMO Global Smaller Companies (BGSC) 145.20p -1.22%
Apax Global Alpha Limited (APAX) 164.00p -1.20%