London close: Stocks manage to end week positively

(Sharecast News) - Stocks in London managed to close just above the waterline on Friday, buoyed by strong UK private sector output data as investors apparently shrugged off weak retail sales. The FTSE 100 ended the day up 0.15% at 7,914.13, while the FTSE 250 gained 0.7% to close at 19,270.01.

For the week as a whole, the FTSE 100 was in the green, having added 42.22 points, or 0.54%, over the last five sessions.

In currency markets, sterling weakened against both the dollar and the euro, and was last down 0.21% on the former at $1.2147, while retreating 0.26% from the common currency to change hands at €1.1314.

"The week has ended with US markets edging lower, though in Europe a more optimistic tone prevails," said IG chief market analyst Chris Beauchamp.

"Risk appetite was shaken by the prospect of a fresh standoff between the US and China, which hit Chinese tech stocks early on this morning, but the afternoon session has seen Europe stabilise.

"Overall, stocks are still unable to establish a clear direction - having rebounded from the March lows there is a sense of caution about where we go from here."

Beauchamp said that after a busy week for earnings, next week would see the pace pick up yet further with big tech leading the charge from a host of sectors.

"Stocks are still looking for a catalyst to drive them higher from here, but above all this hangs the worry about the Fed going further on tightening than the market currently expects."

Retail sales disappoint in March, UK private sector activity grows

In economic news, official figures showed UK retail sales fell by more than expected in March, dropping 0.9% following a revised 1.1% increase in February.

Poor weather conditions throughout the month were blamed for the decrease, with department stores and clothing shops seeing sales volumes off 3.2% and 1.7%, respectively.

However, sales volumes rose by 0.6% in the three months to March compared to the previous quarter - the first rise in this series since August 2021.

"No one wants to hit the high street during a downpour," quipped Danni Hewson, head of financial analysis at AJ Bell.

"But the British weather can't take all the blame for falling retail sales. Inflation-weary shoppers have got used to cutting back or cutting out entirely and with prices of essential items like bread and cereal shooting up, some budgets are buckling under the weight."

Hewson said things looked brighter over the three-month period, thanks to strong sales in January and February.

"The latest consumer confidence figures suggest people are feeling better about their personal prospects and are now ready to make big ticket purchases if the price and timing is right."

On a more positive note, a survey showed that output in the UK's private sector grew at the fastest pace in a year in April.

The S&P Global/CIPS flash composite purchasing managers' index rose to 53.9 from 52.2 in March, beating expectations for a reading of 52.5.

The services PMI came in at 54.9 in April, up from 52.9 in March, while the manufacturing output index fell to 48.5 in April from 49.0 in March and remained in contraction territory.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the growth was "lopsided", with surging demand for services contrasting with an ongoing downturn in demand for goods.

"Even within the service sector, growth is dependent on consumers switching spending from goods to services and a revival of financial services activity, both of which are areas susceptible to the impact of higher interest rates and the ongoing cost of living squeeze," he said.

"Business services and manufacturing are clearly struggling.

"However, for now the key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter, the latest PMI reading broadly indicative of GDP rising at a robust quarterly rate of 0.4%."

On the continent, the eurozone economy strengthened in April, with the latest flash HCOB composite PMI output index rising to 54.4 - an 11-month high.

The resurgent services sector was the main driver of growth, with the services PMI business activity index rising to a 12-month high of 56.6.

However, the manufacturing output index fell below the neutral 50.0 level, and the manufacturing PMI slid to a 35-month low of 45.5.

Across the pond, economic activity unexpectedly reaccelerated in the US in April, according to two surveys.

S&P Global's composite output index for both manufacturing and services rose to 53.5, which was an 11-month high.

The services PMI improved from 52.6 to 53.7, beating expectations for a reading of 51.5, while the factory activity PMI improved from 49.2 to 50.4, beating expectations for a reading of 48.0.

Miners on the back foot, Network International jumps on rival bid

On London's equity markers, miners were among the worst performers with Rio Tinto Group down 5.71%, Anglo American down 5.95%, Antofagasta down 2.8%, and Glencore down 2.19%, as copper prices fell.

Glencore was in particular focus after saying it remained on track to exceed earnings forecasts despite a dip in first-quarter production, thanks to strong trading profits.

On the upside, Network International Holdings surged 10.28% after confirming it had received a "highly preliminary" rival cash offer of 400p per share from Canada's Brookfield Asset Management, surpassing a non-binding takeover proposal from a consortium of CVC and Francisco Partners.

Elsewhere, Dowlais Group was among the top gainers on the FTSE 100 index, closing up 4.28%.

"The newly-demerged Dowlais, essentially the automotive part of GKN demerged from Melrose, was chugging higher as investors reacted to the potential opportunities provided by the transition to electric vehicles in the industry it serves," noted Russ Mould, investment director at AJ Bell.

SSE was ahead 1.02% after it announced the appointment of Barry O'Regan as its chief financial officer and executive director, effective from 1 December.

O'Regan, currently finance director of SSE Renewables, trained as a chartered accountant with PwC in Dublin before joining Airtricity in 2005, and subsequently the SSE Group in 2008.

Outside the FTSE 350, Sureserve Group rocketed 37.22% higher after agreeing to be bought by French private equity firm Cap10 in a £214.1m deal.

Reporting by Josh White for Sharecast.com.