London midday: Stocks push higher as retail sales beat expectations

London stocks had pushed higher by midday on Friday, with sentiment boosted by stronger-than-expected domestic retail sales data.

The FTSE 100 was 0.5% higher at 7,231.91, while the pound was up 0.2% against the dollar at 1.2823 and 0.3% firmer versus the euro at 1.1373, after data from the Office for National Statistics showed retail sales jumped more than forecast last month as households engaged in a bit of retail therapy in the face of the political and economic uncertainty.

Retail sales grew 1.0% in January compared to the month before, bouncing back from the 0.7% drop in December that was revised up from the 0.9% fall originally reported. The performance was well ahead of the 0.2% rise that had been expected.

Compared to last year, sales grew 4.2%, stepping up from 3.1% in December and much better than the 3.4% that economists had pencilled in.

Excluding fuel, retail sales rose 1.2% month-on-month, rebounding from the 1% fall in December, while year-on-year this measure was up 4.1% versus 2.9% the preceding month and 3.2% consensus forecast.

"January’s jump in retail sales shows that most households have maintained a happy-go-lucky mentality, despite the fraught political situation," said economist Samuel Tombs at Pantheon Macroeconomics.

"While consumers’ confidence is down, this reflects rather fuzzy expectations that Brexit might be costly eventually. Right now, households’ real incomes are being supported by low inflation, a decade-high rate of nominal wage growth and solid employment gains. Low confidence will prompt consumers to hold back from buying cars, booking holidays and moving home, but the high street will be protected."

Investors were also digesting Prime Minister Theresa May's latest defeat in Commons after MPs voted 303 to 258 overnight against a motion endorsing the government's Brexit negotiating strategy.

Joshua Mahony, senior market analyst at IG, observed that the pound was gradually gaining ground, despite the government defeat. "The decision to reject her call to continue pushing for changes to the backstop means that discussions with the EU are going to be even tougher. After all, this has proven that even if the EU does provide last-minute concessions with the hope of breaking the deadlock, there is no guarantee that the UK parliament would even pass an improved offer."

Developments across the pond were in focus as US President Trump was set to sign a compromise spending deal to avert another government shutdown, but also declare a national emergency in an effort to secure the billions of dollars of funding to build a Mexico border wall.

Trade relations between the US and China remained in focus as it emerged that talks between the two had not yielded a deal ahead of the 1 March deadline on tariffs.

The negotiations were set to continue in the US next week, with US trade negotiator Robert Lighthizer saying that they still need to make headway on some "very, very important and very difficult issues".

On the corporate front, the fizz was back in Coca-Cola HBC following heavy losses a day earlier on the back of the drinks bottler's full-year results.

Royal Bank of Scotland was in the green after saying it doubled profits last year and declaring a special payout on top of an ordinary dividend, while paper and packaging group Mondi rose as it said full-year underlying EBITDA should be higher than 2017's €1.48bn.

Precious metals miner Fresnillo was trading up, along with Acacia Mining and Centamin, amid rising gold prices. Centamin was also in spotlight after announcing a significant Cote d'Ivoire resource increase.

On the downside, Standard Life Aberdeen was under pressure after Japan's Mitsubishi UFJ said it sold its entire stake in the company.

Plus500 tumbled following a report in The Times suggesting that the company may have misled shareholders over some losses in 2017, while Inmarsat was weaker after French peer Eutelsat released disappointing earnings.

In broker note action, Capita was boosted by an upgrade to 'overweight' at Barclays, while Drax was and Domino's were knocked lower by downgrades at Citi and Berenberg, respectively.

Market Movers

FTSE 100 (UKX) 7,231.91 0.48%
FTSE 250 (MCX) 18,926.19 0.15%
techMARK (TASX) 3,527.86 0.28%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,568.00p 4.26%
Evraz (EVR) 535.40p 2.92%
Wood Group (John) (WG.) 522.60p 2.07%
Royal Bank of Scotland Group (RBS) 246.20p 1.90%
Fresnillo (FRES) 992.20p 1.78%
Tesco (TSCO) 221.70p 1.74%
International Consolidated Airlines Group SA (CDI) (IAG) 660.80p 1.69%
Auto Trader Group (AUTO) 465.10p 1.55%
GlaxoSmithKline (GSK) 1,590.00p 1.53%
Reckitt Benckiser Group (RB.) 6,088.00p 1.50%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 234.05p -5.83%
Micro Focus International (MCRO) 1,671.50p -1.88%
Ocado Group (OCDO) 900.60p -1.57%
Marks & Spencer Group (MKS) 284.84p -1.27%
Paddy Power Betfair (PPB) 6,185.00p -1.20%
Centrica (CNA) 137.93p -1.09%
ITV (ITV) 133.35p -1.04%
National Grid (NG.) 842.40p -0.85%
GVC Holdings (GVC) 636.15p -0.83%
Barratt Developments (BDEV) 559.60p -0.82%

FTSE 250 - Risers

Acacia Mining (ACA) 209.47p 5.08%
Centamin (DI) (CEY) 123.58p 3.93%
Ferrexpo (FXPO) 263.25p 3.89%
Lancashire Holdings Limited (LRE) 658.50p 3.38%
Capita (CPI) 118.60p 3.04%
Restaurant Group (RTN) 133.30p 2.70%
Superdry (SDRY) 501.50p 2.68%
Indivior (INDV) 110.10p 2.42%
Stobart Group Ltd. (STOB) 149.40p 2.33%
Avast (AVST) 301.95p 2.11%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 915.50p -12.81%
Drax Group (DRX) 370.60p -6.41%
Domino's Pizza Group (DOM) 247.40p -2.79%
Moneysupermarket.com Group (MONY) 325.12p -2.40%
Cairn Energy (CNE) 208.80p -2.06%
Convatec Group (CTEC) 118.02p -1.81%
Provident Financial (PFG) 487.60p -1.79%
Inmarsat (ISAT) 356.80p -1.65%
CYBG (CYBG) 186.20p -1.64%
IG Group Holdings (IGG) 588.30p -1.62%