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London open: FTSE little changed after disappointing retail sales
London stocks were little changed in early trade on Friday as investors mulled weaker-than-expected retail sales data.
At 0900 BST, the FTSE 100 was up just 0.1% at 7,907.07.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “The FTSE 100 is expected to end the week on a subdued note, with minimal losses possible. The lack of lift-off in any meaningful way is likely to reflect ongoing concerns around economic and business activity following the miss on retail sales.
“At the same time, the US also saw its main indices slip in yesterday’s trading session, with futures now flat. The market is trying to digest a tough set of results from Tesla in particular, where margins are being sacrificed in the name of encouraging people to spend. This has wide ramifications for other growth companies in the region and could be a source of sensitivity for some time.
“The market will also be struggling to find a place to land in expectation of big-tech earnings next week, which should signal the health of the consumer industry, and either prop up or challenge some valuations, given the significant rallies seen since the start of the year. An important report by the Federal Reserve has shown that the US economy has stalled in recent weeks which could act as a drag on equities.”
On home shores, figures released by the Office for National Statistics showed that retail sales fell by more than expected in March after the wet weather kept shoppers at home.
Retail sales volumes fell by 0.9% in March, following a downwardly-revised increase of 1.1% in February. Most analysts had been looking for a 0.5% decline. Within that, food store sales volumes eased 0.7%, reversing February’s 0.6% increase, while non-food stores sales were down 1.3%, compared to a 2.4% rise a month previously.
Retailers reported that poor weather conditions throughout much of the month – the sixth wettest March on record since 1836 – affected sales. Department stores and clothing shops were especially affected, with sales volumes off 3.2% and 1.7% respectively over the month.
Year-on-year, retail sales volumes were down 3.1% on March 2022 and 0.7% below February 2020, pre-pandemic.
In the three months to March, sales volumes rose by 0.6% compared to the previous quarter, the first rise in this series since August 2021.
Meanwhile, a survey out earlier showed that consumer confidence strengthened in April despite soaring food prices and inflation.
GfK’s latest consumer confidence index was -30, a six-point improvement on March and the highest since February 2022, when it was -26.
Within that, all individual measures rose, with expectations for personal finances over the coming year jumping eight points to -13. Expectations for the economic situation rose six points to -34, while the major purchase index was up five points at -28. The savings index, meanwhile, dipped two points to 19.
Joe Staton, client strategy director at GfK, said there had been “a sudden flow of optimism”.
He continued: “As food and energy prices continue to rise and inflation eats into wages, the cost-of-living crisis is a painful day-to-day reality for many. But are all consumers buckling under the pressure? On the evidence of April’s figures, the answer is no.
“The brighter views on what the general economy has in store for us, with April’s six-point rise cementing a 20-point rise since January, could even be seen as the proverbial green shoots of recovery.
“The major purchase index is higher than it has been for a year and will bring much needed cheer to retailers as head into summer.”
In equity markets, miners were the worst performers, with Rio Tinto, Anglo American, Antofagasta and Glencore all lower as copper prices fell.
Glencore was in focus after saying it remained on track to exceed earnings forecasts, despite a dip in first-quarter production, thanks to strong trading profits.
Payments firm Network International surged after confirming it had received a “highly preliminary” rival 400p a share cash offer from Canada’s Brookfield Asset Management. The latest bid trumps a non-binding takeover proposal from a consortium of CVC and Francisco Partners about a cash offer of 387p a share which Network said it was minded to accept if a firm bid was made.
Outside the FTSE 350, Sureserve rocketed after the social housing energy services provider agreed to be bought by French private equity firm Cap10 in a £214.1m deal.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
National Grid Plc | +2.21% | +25.00 | 1,155.50 |
| 2 |  |
Smith & Nephew Plc | +1.69% | +21.00 | 1,267.00 |
| 3 |  |
Imperial Brands Plc | +1.62% | +31.50 | 1,971.00 |
| 4 |  |
Centrica Plc | +1.60% | +1.80 | 114.55 |
| 5 |  |
Sse Plc | +1.51% | +27.50 | 1,850.00 |
| 6 |  |
United Utilities Group Plc | +1.49% | +16.00 | 1,091.00 |
| 7 |  |
Astrazeneca Plc | +1.48% | +178.00 | 12,188.00 |
| 8 |  |
Pearson Plc | +1.45% | +12.20 | 853.60 |
| 9 |  |
Rentokil Initial Plc | +1.44% | +8.80 | 620.20 |
| 10 |  |
Relx Plc | +1.38% | +37.00 | 2,726.00 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rio Tinto Plc | -4.39% | -239.00 | 5,203.00 |
| 2 |  |
Bhp Group Limited | -3.26% | -80.50 | 2,388.00 |
| 3 |  |
Anglo American Plc | -2.80% | -76.00 | 2,638.00 |
| 4 |  |
Easyjet Plc | -2.44% | -12.60 | 504.00 |
| 5 |  |
Carnival Plc | -2.24% | -15.40 | 672.20 |
| 6 |  |
Fresnillo Plc | -1.68% | -13.20 | 772.80 |
| 7 |  |
Melrose Industries Plc | -1.63% | -6.75 | 406.70 |
| 8 |  |
Antofagasta Plc | -1.49% | -23.50 | 1,550.50 |
| 9 |  |
Burberry Group Plc | -1.34% | -35.00 | 2,580.00 |
| 10 |  |
Glencore Plc | -1.04% | -5.20 | 496.70 |
US close: Stocks weaker as earnings disappoint
Wall Street stocks were still weaker by the close on Thursday, as a fall in oil prices weighed on energy stocks, while continued concerns over the federal debt ceiling added to the dampened investor sentiment.
The Dow Jones Industrial Average closed at 33,786.62, down 0.33%, while the S&P 500 and the Nasdaq Composite saw even greater losses, falling 0.6% and 0.8% to 4,129.79 and 12,059.56, respectively.
On the currency front, the dollar was last up 0.04% on sterling at 80.39p, while it strengthened 0.02% against the common currency to trade at 91.17 euro cents.
It was 0.16% weaker against the yen, however, to change hands at JPY 134.03.
“The disappointing earnings keep on coming,” quipped IG chief market analyst Chris Beauchamp earlier.
“Fresh from Tesla’s poor showing last night – and of course the loss of Musk’s SpaceX rocket – AT&T and American Airlines have thrown fresh fuel on to the bearish fire with uninspiring results.
“As yet, however, the market refuses to turn substantially lower – dip buyers have been content to step in over the past few sessions, even if they haven’t yet found the strength to push indices to fresh monthly highs.”
Data points to labour market weakness as home sales fall
In economic news, the US labour market showed some weakness in the week ended 15 April, with initial unemployment claims rising by 5,000 to reach 245,000 in seasonally-adjusted terms according to the Department of Labor.
That was slightly higher than economists’ forecasts for 242,000.
Meanwhile, the Federal Reserve Bank of Philadelphia reported that factory sector activity in the US mid-Atlantic region unexpectedly softened in April, with the regional manufacturing sector index dropping from -23.2 in March to -31.3.
That was worse than the reading of -20.0 economists had pencilled in.
Elsewhere, the Conference Board‘s leading index also saw a decline of 1.2% in March, reaching a reading of 108.4.
That marked an acceleration from the 0.5% decline in February.
Finally on data, the National Association of Realtors reported that US existing home sales fell by 2.4% month-on-month in March, to a seasonally-adjusted annual rate of 4.4 million, just below the estimated 4.5 million.
However, February saw a revised 13.8% increase in sales, making for the biggest surge since July 2020.
IBM ekes out gains as Tesla takes a tumble
On the equity front, International Business Machines (IBM) managed gains of 0.03% after it announced that margins had expanded.
Housebuilder DR Horton surged 5.64% after the firm reported improved demand throughout the first quarter.
Tools and equipment behemoth Snap-On posted impressive quarterly earnings per share that beat estimates by 46 cents, seeing its share price jump 7.97%.
On the downside, electric carmaker Tesla took a 9.75% hit after it was revealed that both net income and GAAP earnings had declined by more than 20% year-on-year.
Telecoms giant AT&T tumbled 10.41% despite the company beating earnings estimates, as it posted weaker-than-expected free-cash flow.
American Express profits fell short of expectations, seeing its shares decline 1.01%, despite its quarterly report pointing to a continued surge in consumer spending.
Finally, tobacco company Philip Morris International lowered its full-year adjusted earnings per share guidance as first-quarter earnings contracted, despite revenue growth.
That saw its stock sitting 4.73% lower by the closing bell.
Friday newspaper round-up: Forecourt owners, fake reviews, BuzzFeed
Forecourt owners in the UK are adding to soaring inflation for consumers by charging many businesses that rely on diesel more than necessary at the pumps, campaigners have claimed. The pump price for diesel is about 10% higher than for petrol, even though the wholesale market price is lower, reigniting concerns that forecourt owners are profiteering at the expense of diesel drivers. – Guardian
Facebook groups offering fake reviews on the likes of Amazon, Google and Trustpilot are persistent despite regulators’ demands that tech platforms do more to tackle the issue, according to an investigation by a consumer group. Groups on the social network with thousands of members offer free products in exchange for reviews, said the consumer group Which?, despite past interventions by UK regulators. – Guardian
The City watchdog is clearing the way for millions of buy-to-let landlords and flat owners to claw back billions of pounds lost in secret building insurance commissions. Leaseholders will be defined as customers of buildings insurance under new rules planned by the Financial Conduct Authority (FCA) that will give homeowners new grounds to claim for thousands in wrongly charged fees. – Telegraph
Over-50s are dropping out of the workforce because of “ageist” companies, MPs have claimed. A report from the Labour-led Business, Energy and Industrial Strategy select committee blamed businesses for the recent exodus of older workers, saying unfriendly policies were the cause rather than a wave of early retirement. – Telegraph
BuzzFeed News, the lossmaking website that once won a Pulitzer Prize, is closing as its parent company seeks to cut costs by slashing 15 per cent of its workforce. The business has gone through “more challenges than I can count in the past few years”, Jonah Peretti, 49, BuzzFeed’s chief executive, said. – The Times
