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London midday: Stocks steady as sterling pops on retail sales data
London stocks were steady by midday on Thursday as the small gains eked out earlier evaporated after stronger-than-expected retail sales data lit a fire under the pound.
The FTSE 100 was flat at 7,788.04 as sterling pushed up 0.5% against the dollar to 1.3409 and 0.2% versus the euro to 1.1432 after data from the Office for National Statistics showed that retail sales volumes rose much more than forecast in April as the industry recovered well from the weather-induced slump the month before.
A stronger pound tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Chris Beauchamp, chief market analyst at IG, said: "UK retail sales provided some relief from the economic gloom that seemed to hang over markets yesterday, and taken with yesterday's CPI figure perhaps things are looking a bit rosier for UK consumers. Whether that helps the beleaguered high street is another matter entirely, since more than one month of heavy shopping is going to be needed to rescue the UK retailers."
Retail sales in April climbed 1.6% month-on-month and 1.4% on the year, comfortably exceeding the consensus forecast of 0.9% for monthly growth and 0.2% for the year.
Non-food sales rose 1.5% on the month while food sales were up 1.4%. Petrol sales rebounded 4.7% month-on-month in April after diving 6.9% a month earlier when drivers were more homebound due to the snow.
Increases were seen across all sectors in April, except department stores, the ONS said, with department stores declining following relatively strong sales last month, when their online sales were boosted during the adverse weather.
The high street's underlying performance over recent months remained subdued, with volumes up just 0.1% in the three months to April, compared to the three months to January.
Shop price inflation clambered back up to 2.2% in April due to higher oil prices, having fallen to a 14-month low of 1.9% in March from 2.5% in February and a peak of 3.3% last September. Shop price inflation excluding fuel was stable at 2.0% in April, the lowest since April last year.
Retail sales bounced back in April as petrol and other sales recovered from the snowfall, said Rob Kent-Smith, ONS head of national accounts. "But the underlying position remains subdued with the volume of goods sold over the last six months broadly unchanged...Over the longer-term retail sales growth has slowed considerably, with increases in food, household goods and internet retailers being largely offset by declines across all other types of retailing."
In company specific retail, B&Q and Screwfix owner Kingfisher shares climbed despite saying that sales were hammered by the bad weather in February and March, with like-for-like sales down 4%. But management expressed confidence about the underlying turnaround of the business.
Intertek was the standout gainer after the testing company posted 4.4% growth in revenue for the first four months of the year and said it was on track to deliver its 2018 targets.
Paddy Power Betfair was also a high riser after confirming late on Wednesday that it has agreed to merge its US business with US fantasy sports betting site Fan Duel.
Electrocomponents surged as in the black after it reported a 35% jump in full-year adjusted pre-tax profit and announced the acquisition of IESA for £88m.
TalkTalk was on the up after announcing the sale of its B2B business for £175m, while Tate & Lyle rallied after saying its full-year profits rose by nearly a quarter, although sales slipped.
Budget airline Wizz flew higher after it said annual profit rose 22% and passenger numbers grew 25%, while Renewi shot higher as the waste-to-product company reported a doubling of full-year pre-tax profit.
Transport operator Go-Ahead pushed higher after saying it was confident of delivering full-year results "slightly ahead" of its previous expectations and Capital & Counties gained as it said it's considering a demerger that would create two separately-listed businesses based around its Covent Garden and Earls Court estates.
On the downside, Mediclinic tumbled as sizeable Swiss write-downs led to paper losses but underlying earnings rose 3%.
United Utilities was also on the back foot after its full-year numbers, while Paragon Banking Group slumped as its first-half numbers missed expectations.
In broker note action, Bakkavor was cut to 'hold' at HSBC, while AB Foods and Bunzl were both downgraded to 'neutral' at Goldman Sachs.
Drinks maker Britvic was lifted to 'buy' at Societe Generale a day after well-received results.
Elsewhere, ex-dividends took 3.25 points off the FTSE 100 and 15.5 points off the 250. Bellway, Bunzl, Carnival, Countryside Properties, Diploma, Euromoney, Brewin Dolphin, Marston's, Soco, Tritax Big Box, Whitbread and Morrisons were among them.
Market Movers
FTSE 100 (UKX) 7,788.04 -0.01%
FTSE 250 (MCX) 21,074.26 0.33%
techMARK (TASX) 3,544.54 0.28%
FTSE 100 - Risers
Intertek Group (ITRK) 5,340.00p 3.21%
Paddy Power Betfair (PPB) 8,850.00p 2.55%
St James's Place (STJ) 1,222.00p 1.83%
Kingfisher (KGF) 300.50p 1.73%
Smith & Nephew (SN.) 1,347.50p 1.62%
British American Tobacco (BATS) 3,817.50p 1.42%
Evraz (EVR) 486.80p 1.42%
Experian (EXPN) 1,874.50p 1.27%
Diageo (DGE) 2,741.50p 1.24%
Johnson Matthey (JMAT) 3,515.00p 1.18%
FTSE 100 - Fallers
Mediclinic International (MDC) 637.20p -6.24%
Morrison (Wm) Supermarkets (MRW) 247.70p -2.63%
Severn Trent (SVT) 2,028.00p -2.41%
United Utilities Group (UU.) 786.80p -2.02%
Bunzl (BNZL) 2,276.00p -1.81%
ITV (ITV) 167.40p -1.44%
BT Group (BT.A) 203.35p -1.43%
Marks & Spencer Group (MKS) 302.60p -1.40%
easyJet (EZJ) 1,714.00p -1.27%
Imperial Brands (IMB) 2,781.50p -1.26%
FTSE 250 - Risers
Electrocomponents (ECM) 696.40p 10.82%
Tate & Lyle (TATE) 662.00p 8.70%
Renewi (RWI) 76.20p 6.42%
Greencore Group (GNC) 185.55p 6.03%
Wizz Air Holdings (WIZZ) 3,284.00p 4.45%
Senior (SNR) 321.20p 3.68%
Ultra Electronics Holdings (ULE) 1,640.00p 3.14%
Sophos Group (SOPH) 578.66p 2.24%
Cranswick (CWK) 3,273.00p 2.15%
Cobham (COB) 123.45p 2.11%
FTSE 250 - Fallers
Paragon Banking Group (PAG) 500.00p -9.50%
Ibstock (IBST) 276.00p -5.67%
McCarthy & Stone (MCS) 126.80p -3.50%
Contour Global (GLO) 232.00p -2.52%
Spire Healthcare Group (SPI) 248.80p -2.51%
Thomas Cook Group (TCG) 119.80p -2.36%
Tullow Oil (TLW) 253.00p -2.28%
Pets at Home Group (PETS) 133.34p -2.24%
Halfords Group (HFD) 334.20p -2.11%
Bank of Georgia Group (BGEO) 3,211.50p -2.03%