London close: Stocks finish turbulent week in the green

London stocks finished in the green on Friday, after fresh data suggested a bounce-back for retail sales in October, although they remained weaker than before the pandemic.

The FTSE 100 ended the session up 0.53% at 7,385.52, and the FTSE 250 was ahead 0.84% at 19,283.05.

Sterling was also in positive territory, and was last up 0.23% on the dollar at $1.1891, as it gained 0.44% against the euro to trade at €1.1495.

“It looks set to be another positive week for markets in Europe, however most of this week’s price action has been confined to a fairly modest range in what looks increasingly like a period of consolidation,” said CMC Markets chief market analyst Michael Hewson.

“The FTSE 100 had yet another look above the 7,400 level and once again was unable to sustain the momentum.

“Amongst the gainers today, retail has done well, with Frasers Group higher after being rated as a buy by Numis, while JD Sports has got a lift after US counterpart Foot Locker upgraded its outlook for the year after beating on third quarter results.”

In economic news, retail sales volumes nudged higher in October according to official figures, partially reversing September’s fall.

The Office for National Statistics said sales rose 0.6% following a fall of 1.5% - revised down from an initial estimate for 1.4% - in September, when shops and businesses closed for the state funeral of Elizabeth II.

Analysts had been expecting a rise of around 0.5%.

Increases were seen across all the main sectors apart from food stores, where volumes fell 1%, or 4.1% when compared to pre-Covid levels in February 2020.

Industry data was now increasingly showing that consumers, hit hard by the inflation and the cost of living crisis, were switching to cheaper brands and buying less when doing their weekly shops.

Non-food sales volumes rose by 1.1% in October 2022, although they remained 1.7% below February 2020.

Year-on-year, sales fell 6.1%, slightly better than forecasts for a fall of 6.5%, while in the three months to October, sales fell 2.4% against the previous three months.

“The partial recovery in retail sales in October is a false dawn. September’s retail sales figures were depressed artificially by the Queen’s funeral, so a partial recovery always looked likely,” said Gabriella Dickens, senior UK economist at Pantheon Macroeconomics.

“Retail sales will likely hold their ground over the remainder of 2022, as households’ disposable incomes have been boosted by the reversal of April’s increase in employees’ National Insurance contributions and by the cost of living grant.

“Nevertheless, households will see their incomes hit hard again early next year, as government support starts to wind down.”

Elsewhere, Britons were warned of “several decades” of high taxes as a result of “own goals” on economic policy by successive Conservative governments by an influential think tank earlier.

Responding to Chancellor Jeremy Hunt’s autumn budget containing £55bn of tax rises and public spending cuts, the Institute for Fiscal Studies (IFS) said the UK had “just got a lot poorer”.

Living standards were set to fall by 7% to their lowest levels since records began, wiping out eight years of growth in the process as wages fall well behind surging inflation and interest rates.

In stark terms, real disposable incomes could be at 2013 levels, according to the independent spending watchdog the Office for Budget Responsibility.

“Our tax burden is going to settle at its highest level in history,” said IFS director Paul Johnson.

“Post-election spending plans are actually pretty austere - that’s a pretty nasty place to be; high borrowing, high debt, high tax and public spending under strain.

“How are all of those things consistent with one another? Part of the answer to that lies in the fact that we all got just a whole lot poorer.”

Across the pond, America's economy was looking to be on the cusp of a recession, according to an index seen as a foreshadow of the economic cycle.

The Conference Board's index of leading economic indicators fell by 0.8% month-on-month in October, compared to the 0.4% decline pencilled in by economists.

At the same time, the index of coincident indicators rose by 0.2%.

According to the Conference Board, "taken together, the current behaviour of the composite indexes and their components suggests that the economy may be on the cusp of a recession in the near term."

Of the index’s 10 components, just three contributed positively to the index - the interest rate spread, manufacturers' new orders for core capital goods and manufacturers' new orders for consumer goods and material.

Over the six months through October, the index dropped 3.2%, or roughly 6.3% in annualised terms, against a 0.5% increase over the prior six-month stretch.

On London’s equity markets, Legal & General rose 3.08% after it backed its full-year guidance for operating profit growth and capital generation, and said its pension risk transfer business had continued to perform strongly.

Bodycote advanced 3.02% after it held its full-year guidance as well, and said revenue in the four months ended 30 October rose by a third due to price increases and energy cost surcharges.

British Gas owner Centrica, SSE and Drax Group were on the rise again, by a respective 1.42%, 1.65% and 3%, after the Chancellor outlined new windfall taxes in his autumn statement on Thursday.

Barclays said in a note that overall, the 45% levy on excess profits above £75 per MWh was "better than worst case, and with clarity, Centrica, Drax and SSE should re-rate".

It added that Centrica was its preferred UK utility.

Ocado Group closed up 2.23%, having slumped on Thursday after hedge fund Kintbury Capital said it expected a 50% downside in the shares at best.

JD Sports Fashion rallied 4.32% as US peer Foot Locker surged, after the sportswear retailer lifted its full-year outlook and reported better-than-expected third-quarter results.

ConvaTec Group was 4.52% higher after Liberum reiterated its ‘buy’ rating on the shares, saying its capital markets day reinforced its view "that it is a quality company and that, as investors warm to the turnaround, the shares will re-rate".

"In fact, if anything, we came away from the day more confident, boosted by a clear sense that the company was shifting to the front foot and a set of ambitious but, in our view, achievable financial targets," Liberum said.

Sirius Real Estate continued to gain after forecasting a rise in its dividend on Thursday, closing Friday’s session ahead 4.46%.

Royal Mail owner International Distribution Services was 6.32% firmer after Berenberg lowered its target price to 370.0p from 480.0p, but said the company's recent first-half results offered "limited" comfort to shareholders.

Berenberg said the company’s interim results, which followed a string of profit warnings and negative headlines, could come as "some relief" to investors as they included no further cuts to guidance.

Pub group Mitchells & Butlers was 1.71% higher after the government froze business rates in the autumn budget delivered on Thursday.

On the downside, Intertek Group was knocked 0.88% lower by a downgrade to ‘sell’ at Stifel, while outsourcer Mitie Group was 4.9% weaker after a downgrade to ‘add’ at Numis.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,385.52 0.53%
FTSE 250 (MCX) 19,283.05 0.84%
techMARK (TASX) 4,364.37 0.67%

FTSE 100 - Risers

Frasers Group (FRAS) 823.00p 5.92%
Convatec Group (CTEC) 231.20p 4.52%
JD Sports Fashion (JD.) 119.60p 4.32%
Harbour Energy (HBR) 327.40p 4.27%
Next (NXT) 5,732.00p 3.47%
Kingfisher (KGF) 246.10p 3.40%
Phoenix Group Holdings (PHNX) 596.00p 3.33%
United Utilities Group (UU.) 1,026.00p 3.32%
Intermediate Capital Group (ICP) 1,210.50p 3.28%
Flutter Entertainment (CDI) (FLTR) 11,565.00p 3.26%

FTSE 100 - Fallers

Prudential (PRU) 978.60p -1.90%
Smiths Group (SMIN) 1,575.00p -1.35%
Rolls-Royce Holdings (RR.) 85.49p -1.28%
Glencore (GLEN) 505.80p -1.19%
Halma (HLMA) 2,214.00p -0.98%
Intertek Group (ITRK) 3,924.00p -0.88%
Shell (SHEL) 2,344.50p -0.85%
Haleon (HLN) 287.20p -0.74%
Standard Chartered (STAN) 581.60p -0.55%
BP (BP.) 476.05p -0.54%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 80.50p 15.33%
Aston Martin Lagonda Global Holdings (AML) 130.95p 7.25%
International Distributions Services (IDS) 253.60p 6.32%
Liontrust Asset Management (LIO) 1,158.00p 4.89%
Sirius Real Estate Ltd. (SRE) 82.00p 4.46%
Diploma (DPLM) 2,800.00p 4.01%
Balfour Beatty (BBY) 320.00p 3.83%
Greencoat UK Wind (UKW) 157.30p 3.83%
Pennon Group (PNN) 945.50p 3.76%
Bank of Georgia Group (BGEO) 2,535.00p 3.47%

FTSE 250 - Fallers

Mitie Group (MTO) 73.80p -4.90%
Morgan Advanced Materials (MGAM) 302.00p -2.58%
ASOS (ASC) 703.50p -2.56%
Just Group (JUST) 70.00p -2.51%
RIT Capital Partners (RCP) 2,210.00p -2.43%
Hochschild Mining (HOC) 65.40p -2.23%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 87.30p -2.13%
Fidelity China Special Situations (FCSS) 217.50p -2.03%
TUI AG Reg Shs (DI) (TUI) 142.45p -1.96%
Energean (ENOG) 1,400.00p -1.69%