London midday: Stocks muted as solid data boosts sterling

London stocks were still treading water by midday on Friday, held back by a stronger pound after solid retail sales and manufacturing data.

The FTSE 100 was down 0.1% at 7,016.32, while sterling was up 0.2% against the dollar at 1.4216 and 0.3% firmer versus the euro at 1.1635.

Figures released earlier by the Office for National Statistics showed that retail sales surged in April as non-essential stores reopened.

Retail sales jumped 9.2% on the month following a 5.1% increase in March and versus expectations for a 4.5% rise. The largest contribution came from non-food stores, with sales at clothing stores up 69.4%. Compared with April 2020 - during the first national lockdown - retail sales were up 42.4%, exceeding expectations for growth of 36.8%.

Sales volumes are now 10.6% higher than in February 2020, before the impact of the coronavirus pandemic.

Elsewhere, a survey showed that UK business output rose at the fastest pace for more than two decades in May as the economy reopened and confidence strengthened, a survey showed.

The flash IHS Markit/CIPS output index rose to 62 from 60.7 a month earlier. May's score was the highest since the survey began in January 1998. A score of more than 50 indicates growth. Services activity rose to a 91-month high of 61.8 while the UK manufacturing purchasing managers' index hit 66.1 - the highest reading since 1992. Both scores were "flash" figures that may be revised.

Joshua Mahony, senior market analyst at IG, said: "After a week of high volatility, today has all the markings of a more controlled approach into the weekend. The lack of major volatility overnight has carried through into Europe, with UK stocks the one area of weakness on an otherwise positive start to the day.

"The declines seen in the FTSE 100 come off the back of a sharp appreciation for the pound, with EURGBP heading south and GBPUSD heading north. That sterling strength has been driven largely by an impressive batch of retail sales and PMI figures. The reopening of the UK economy was always expected to help lift the economic data in a relatively dramatic manner, and today’s 42.4% retail sales figure was exactly that. With 2020 having seen a massive build-up in savings, we are finally seeing signs that consumers are heading out to draw down those savings to the benefit of UK plc."

In equity markets, B&Q owner Kingfisher was in the red, having risen a day earlier on the back of a first-quarter update.

Hargreaves Lansdown was knocked lower by a downgrade to ‘sell’ at Citi, which said the stock’s valuation looks rich and revenues are more likely-than-not to fall next year.

Diversified Energy was under the cosh after it raised $225m through a placing and open offer to help fund the acquisition of certain upstream assets from Blackbeard Operating and Indigo Minerals. The shares were placed at 112p each, which is an 8.3% discount to the closing mid-market price on Thursday.

Going the other way, builders’ merchant Travis Perkins was in the black after saying it has sold its plumbing & heating distribution business to an affiliate of alternative investment firm H.I.G. Capital for £325m in cash.

Biffa gained after the waste management group struck a deal to buy the collections business and some recycling assets from Viridor Waste for £126m.

Close Brothers rose as it reported a strong third quarter, underpinned by new banking business and busy trading at its Winterflood securities operation.

Market Movers

FTSE 100 (UKX) 7,016.32 -0.05%
FTSE 250 (MCX) 22,416.77 0.11%
techMARK (TASX) 4,300.24 0.20%

FTSE 100 - Risers

Antofagasta (ANTO) 1,560.00p 2.46%
BT Group (BT.A) 174.20p 1.96%
International Consolidated Airlines Group SA (CDI) (IAG) 195.30p 1.82%
Whitbread (WTB) 3,132.00p 1.79%
Weir Group (WEIR) 1,847.00p 1.76%
Flutter Entertainment (CDI) (FLTR) 12,890.00p 1.74%
Glencore (GLEN) 315.20p 1.12%
Entain (ENT) 1,580.50p 1.12%
BAE Systems (BA.) 521.00p 0.93%
Ashtead Group (AHT) 5,120.00p 0.87%

FTSE 100 - Fallers

Kingfisher (KGF) 360.50p -3.66%
British Land Company (BLND) 512.60p -3.32%
Land Securities Group (LAND) 707.20p -1.64%
Severn Trent (SVT) 2,497.00p -1.23%
Vodafone Group (VOD) 126.32p -1.22%
B&M European Value Retail S.A. (DI) (BME) 567.40p -1.18%
Johnson Matthey (JMAT) 3,169.00p -1.15%
Informa (INF) 532.80p -1.11%
Pearson (PSON) 835.60p -1.11%
Hargreaves Lansdown (HL.) 1,662.50p -1.10%

FTSE 250 - Risers

Biffa (BIFF) 299.00p 7.94%
Rank Group (RNK) 184.80p 4.29%
PureTech Health (PRTC) 366.00p 3.39%
Cineworld Group (CINE) 87.88p 3.24%
Network International Holdings (NETW) 399.80p 3.20%
Pantheon International (PIN) 2,620.00p 3.15%
QinetiQ Group (QQ.) 335.00p 2.63%
CMC Markets (CMCX) 475.50p 2.48%
JTC (JTC) 662.00p 2.32%
Watches of Switzerland Group (WOSG) 787.00p 2.08%

FTSE 250 - Fallers

Diversified Energy Company (DEC) 111.20p -9.00%
Dunelm Group (DNLM) 1,517.00p -2.19%
Safestore Holdings (SAFE) 936.50p -1.99%
Future (FUTR) 2,852.00p -1.79%
C&C Group (CDI) (CCR) 313.20p -1.69%
Shaftesbury (SHB) 591.00p -1.58%
Redrow (RDW) 665.60p -1.45%
Premier Foods (PFD) 99.60p -1.39%
Great Portland Estates (GPOR) 700.00p -1.34%
Capital & Counties Properties (CAPC) 168.80p -1.29%