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London close: Stocks end higher, tracking early gains on Wall Street
London stocks finished near their best level of the session on Friday, boosted by better-than-expected economic data in the States and as the pound slipped back below $1.41, albeit following disappointing retail sales data at home.
The FTSE 100 was up 0.83% or 59.89 points to 7,294.70, while the pound's recent bounce reversed with a 0.39% decline against the greenback to 1.4044, although it was 0.19% higher versus the euro to 1.1295, after official retail figures showed slower growth than expected in January.
Sales volumes were up 0.1% on the month compared to a 1.4% drop in December, missing expectations for a 0.4% gain. Three-month sales to the end of January were also at the lowest level since last April. On the year, retail sales were up 1.6% in January, falling short of expectations for a 2.4% increase.
Non-food volumes rose by 0.7% month-to-month, so the weakness reflected a 0.4% decline in food store sales, building on December's 0.9% drop.
ONS senior statistician Rhian Murphy said: "Retail sales growth was broadly flat at the beginning of the New Year with the longer-term picture showing a continued slowdown in the sector. This can partly be attributed to a background of generally rising prices. Growth in the quantity of sporting equipment, games and toys being bought was offset by falling food sales when compared with the same month a year earlier. Sporting equipment sales have grown more than usual in January following an increased uptake for gym wear."
Earlier this week, figures from the ONS revealed that UK inflation unexpectedly held steady at 3% last month, just shy of November's five-year high of 3.1%.
Pantheon Macroeconomics said that the failure of retail sales to recover meaningfully from December's drop highlighted that consumers can't be counted on to drive the economy forwards this year.
"Consumers will come under more pressure to scrimp as the fiscal consolidation intensifies in April and mortgage rates continue to creep up. Slower job creation, meanwhile, likely will be the flip-side of stronger growth in wages this year, implying that growth in overall nominal incomes won't accelerate this year. And finally, households' low saving rate means that they have little scope to shield spending from any further shocks to their incomes. As such, 2018 is shaping up to be another tough year for retailers."
Stateside, the Commerce Department reported that US housing starts jumped by 9.7% month-on-month in January to reach a seasonally adjusted rate of 1.326m (consensus: 1.234m), alongside a much better than forecast reading on consumer confidence at the start of February, courtesy of the University of Michigan.
In corporate news, warehouse property owner and developer Segro surged after taking the wraps off a strong set of results for 2017, with a record level of development completions during the period, almost all of which have been leased. Results were ahead of consensus forecasts on both net asset value and earnings as the company reported good underlying investment and occupational markets, aided by lots of development activity after the £900m fundraising and debt restructure.
Infrastructure group Balfour Beatty gained as it won a 30% share of a huge contract to design and build an 'automated people mover' at Los Angeles International airport.
Rio Tinto shares on the other hand edged lower after saying it had been told by Mongolia it had until 2022 to find a domestic power source for the $5.3bn expansion the Oyu Tolgoi mine. Analysts at SP Angel noted that Rio already operates on-site power generation at a number of its mines in Australia and in the US "and will certainly have both the in-house expertise and the wider industry contacts to develop a practical and cost-effective power supply solution".
Speciality chemicals company Croda rose as its wholly-owned subsidiary, Croda Europe, agreed to buy AIM-listed crop enhancement developer Plant Impact for around £10m.
On the downside, BGEO, formerly Bank of Georgia, fell despite posting an 8.1% jump in full-year profit and saying its plans to split into two London-listed companies was still on track. Broker Numis said it was "strong" fourth quarter and a "better than expected" result for 2017 as a whole.
Temporary power supplier Aggreko was hit by a downgrade from Bank of America-Merrill Lynch, but Restaurant Group was up after being lifted to 'hold' from 'reduce' at HSBC and Standard Life Aberdeen gained on the back of an upgrade to 'outperform' from 'market perform' by Bernstein.
Evraz made gains after being initiated at 'buy' by Deutsche Bank, while ConvaTec rallied after an upgrade at JPMorgan and LSE advanced after Societe Generale reinstated the stock at 'buy'.
Market Movers
FTSE 100 (UKX) 7,294.70 0.83%
FTSE 250 (MCX) 19,733.64 0.81%
techMARK (TASX) 3,321.44 0.84%
FTSE 100 - Risers
SEGRO (SGRO) 591.20p 6.48%
NMC Health (NMC) 3,430.00p 4.64%
WPP (WPP) 1,471.00p 4.18%
Evraz (EVR) 394.70p 2.92%
Pearson (PSON) 700.60p 2.76%
Reckitt Benckiser Group (RB.) 6,568.00p 2.69%
Coca-Cola HBC AG (CDI) (CCH) 2,456.00p 2.68%
Vodafone Group (VOD) 204.65p 2.40%
ITV (ITV) 171.75p 2.23%
Severn Trent (SVT) 1,738.00p 2.06%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 6,306.00p -2.14%
Antofagasta (ANTO) 914.40p -1.91%
BHP Billiton (BLT) 1,577.40p -1.29%
Rolls-Royce Holdings (RR.) 832.20p -0.95%
Carnival (CCL) 4,827.00p -0.72%
Rio Tinto (RIO) 4,107.50p -0.44%
Kingfisher (KGF) 358.60p -0.33%
Persimmon (PSN) 2,417.00p -0.33%
Burberry Group (BRBY) 1,550.50p -0.29%
CRH (CRH) 2,482.00p -0.28%
FTSE 250 - Risers
Capita (CPI) 190.50p 5.25%
Fisher (James) & Sons (FSJ) 1,498.00p 5.20%
TalkTalk Telecom Group (TALK) 106.30p 4.63%
SIG (SHI) 147.70p 4.46%
Hunting (HTG) 594.50p 4.02%
Card Factory (CARD) 200.80p 3.99%
Inmarsat (ISAT) 447.50p 3.71%
Fidelity China Special Situations (FCSS) 247.50p 3.56%
Great Portland Estates (GPOR) 637.00p 3.49%
Computacenter (CCC) 1,130.00p 3.48%
FTSE 250 - Fallers
Lancashire Holdings Limited (LRE) 570.00p -4.28%
Aggreko (AGK) 760.20p -3.45%
Rank Group (RNK) 227.00p -2.99%
Genus (GNS) 2,284.00p -2.89%
Ted Baker (TED) 2,946.00p -2.19%
BGEO Group (BGEO) 3,326.00p -2.18%
Brown (N.) Group (BWNG) 189.00p -2.07%
Ascential (ASCL) 364.00p -1.94%
JPMorgan Indian Investment Trust (JII) 720.00p -1.64%
Entertainment One Limited (ETO) 290.20p -1.63%