London close: Stocks mixed after disappointing retail sales data

(Sharecast News) - London stocks closed with mixed results on Friday, influenced by earlier declines in the US and Asian markets, as investors reacted to a larger-than-expected drop in UK retail sales.

The FTSE 100 index dipped 0.26%, ending the day at 8,317.59 points, while the FTSE 250 saw a gain of 0.68%, closing at 20,770.93.

In currency markets, sterling was last up 0.34% on the dollar to trade at $1.2742, while it edged up 0.01% against the euro, changing hands at €1.1742.

"Following a disappointing session in Asia and Europe, US stock indices shrug off risk-off sentiment amid this week's 'rates higher for longer' outlook as durable goods orders unexpectedly rise," said IG senior market analyst Axel Rudolph.

"The US two-year yield comes slightly off its Thursday 4.95% high while the 10-year yield stalls at the 4.50% marker with the greenback giving back some of this week's gains."

Rudolph noted that over the course of the week, oil prices dropped more than 3% to a near three-month low amid demand concerns, before managing to heave into the green ahead of next week's online OPEC+ meeting.

"US natural gas prices fall by around 2.5% from their five-month peak while the price of gold remains little changed and that of silver rises by around a percentage point ahead of the weekend.

"Next week the focus will remain on inflation with the Fed's preferred PCE inflation gauge."

Retail sales decline more than expected, but consumer confidence improves

In economic news, retail sales in the UK saw a significant decline in April, according to official data released earlier.

The Office for National Statistics reported that retail sales volumes fell by 2.3% last month, following a revised 0.2% decline in March, previously estimated at 0.0%.

Analysts had anticipated a smaller drop of around 0.5%.

The decline was attributed to poor weather, which kept shoppers at home, leading to decreased sales across most sectors, particularly in clothing, sports equipment, games, toys, and furniture.

Non-food store sales volumes fell by 4.1%.

Despite the monthly drop, sales rose by 0.7% in the three months to April compared to the previous quarter.

However, year-on-year sales were down 2.7%, remaining 3.8% below pre-pandemic levels.

The downturn contrasted with recent positive economic indicators, including improved consumer confidence, inflation returning to 2.3%, and the UK exiting a recession with 0.6% growth.

"There was nothing charming about the rainfall that soaked our high streets in April," said Danni Hewson, head of financial analysis at AJ Bell.

"It didn't help that Easter came early. But even then, March's flatlining sales were revised down.

"Consumers are still looking for ways to keep a tight hold on their stretched finances; if they don't need to spend, they probably won't."

In contrast, UK consumer confidence showed signs of improvement in May.

The GfK consumer confidence index rose two points to -17, driven by increased optimism about the economy and personal finances.

Expectations for the general economic situation over the next year climbed four points to -17, while the forward-looking personal finance situation jumped five points to 7.

However, the major purchase index dipped one point to -26.

"With the latest drop in headline inflation and the prospect of interest rate cuts in due course, the trend is certainly positive after a long period of stasis which has seen the overall index score stuck in the doldrums," said Joe Staton, client strategy director at GfK.

"All-in-all, consumers are clearly sensing that conditions are improving.

"This good result anticipates further growth in confidence in the months to come."

On the continent, Germany's economy grew by 0.2% in the first quarter of 2024, according to the Federal Statistics Office, confirming earlier estimates.

It followed a 0.5% contraction in the fourth quarter of the prior year.

The growth rate for the same period in 2023 was 0.3%.

Across the Atlantic, durable goods orders in the US unexpectedly rose by 0.7% in April to $284.1bn, according to the Department of Commerce.

The increase came despite a sharp downward revision to March's figures, which were adjusted from an initial estimate of 2.6% growth to just 0.8%.

However, US consumer sentiment declined in May, according to the University of Michigan's consumer confidence index.

The index fell from 77.2 in April to 69.1 in May, with subindices tracking views on current economic conditions and future expectations both showing decreases.

Retailers rise despite sales data, National Grid falls further

On London's equity markets, retail stocks were in the green despite the ONS reporting a drop in retail sales for April.

Ocado Group surged by 6.16%, Kingfisher rose by 1.31%, and Marks and Spencer Group climbed 2.26%, as investors seemed unfazed by the disappointing sales data.

Packaging group Mondi saw a 0.89% increase after Citi upgraded the stock to 'buy', citing reversing market headwinds in destocking and lower pricing across Mondi's product segments.

Intertek Group also gained 1.26% after confirming its full-year expectations and reporting a 7% growth in like-for-like revenue, driven by a strong recovery in the consumer products segment.

John Wood Group rallied 4.5% after rejecting a third improved takeover proposal from Dubai-based Sidara.

The oil services company stated that the offer of 220p per share still "significantly undervalued" the group and its prospects.

Sidara has until 5 June to make a firm bid.

On the downside, GSK dipped by 0.2%, reversing earlier gains despite a favourable court ruling in Illinois regarding the first Zantac case to go to trial.

National Grid plummeted by 11.5%, continuing its decline after announcing plans for a £7bn equity raise through a rights issue.

United Utilities Group and Severn Trent were also in the red, falling 1.48% and 2.16% respectively.

AJ Bell dropped 3.77% after founder Andy Bell sold 7.5 million shares in the investment platform at 375p each, raising around £28.1m.

Hargreaves Lansdown fell by 3.14% following confirmation that it had rejected a 985p per share takeover offer from a consortium including CVC, Nordic Capital, and Platinum Ivy, a subsidiary of Abu Dhabi Investment Authority.

Reporting by Josh White for Sharecast.com.

Market Movers

FTSE 100 (UKX) 8,317.59 -0.26% FTSE 250 (MCX) 20,770.93 0.68% techMARK (TASX) 4,853.89 -0.05%

FTSE 100 - Risers

Ocado Group (OCDO) 373.80p 6.16% Marks & Spencer Group (MKS) 299.20p 2.26% Intertek Group (ITRK) 5,025.00p 1.43% Airtel Africa (AAF) 121.00p 1.42% Phoenix Group Holdings (PHNX) 503.00p 1.41% Smurfit Kappa Group (CDI) (SKG) 3,882.00p 1.36% Kingfisher (KGF) 260.90p 1.31% Legal & General Group (LGEN) 247.90p 1.10% Aviva (AV.) 488.10p 1.08% CRH (CDI) (CRH) 6,406.00p 1.04%

FTSE 100 - Fallers

National Grid (NG.) 889.40p -11.50% RS Group (RS1) 740.50p -2.57% Fresnillo (FRES) 596.00p -2.21% Severn Trent (SVT) 2,449.00p -2.16% Centrica (CNA) 141.15p -1.91% Smith (DS) (SMDS) 369.60p -1.81% Haleon (HLN) 323.00p -1.79% Sage Group (SGE) 1,059.50p -1.76% Lloyds Banking Group (LLOY) 54.80p -1.76% SSE (SSE) 1,740.50p -1.64%

FTSE 250 - Risers

Ferrexpo (FXPO) 47.50p 5.79% NCC Group (NCC) 145.80p 5.19% Wood Group (John) (WG.) 188.00p 5.17% SDCL Energy Efficiency Income Trust (SEIT) 64.90p 5.02% Direct Line Insurance Group (DLG) 210.40p 4.89% Ibstock (IBST) 171.60p 3.62% Paragon Banking Group (PAG) 768.50p 3.50% Plus500 Ltd (DI) (PLUS) 2,234.00p 3.33% Watches of Switzerland Group (WOSG) 407.80p 3.18% Travis Perkins (TPK) 858.00p 3.13%

FTSE 250 - Fallers

Essentra (ESNT) 166.40p -4.91% AJ Bell (AJB) 384.50p -4.59% Trustpilot Group (TRST) 221.50p -3.08% PPHE Hotel Group Ltd (PPH) 1,350.00p -2.88% Hargreaves Lansdown (HL.) 1,090.00p -2.68% Kainos Group (KNOS) 1,236.00p -2.56% QinetiQ Group (QQ.) 413.60p -2.54% TBC Bank Group (TBCG) 2,660.00p -2.21% Tritax Eurobox (GBP) (EBOX) 55.80p -1.76% Drax Group (DRX) 499.20p -1.64%