London close: FTSE hits 10-day high after strong retail data
London stocks finished at a 10-day high on Thursday, lifted by miners, retailers and financials, while the pound given a boost by an unexpected jump in retail sales last month and Brexit hopes.
The FTSE 100 closed up 36 points or 0.5% to 7,367.32, while the pound was up 0.7% against the dollar at 1.3233 but flat versus the euro at 1.1266.
Data from the Office for National Statistics showed UK retail sales rose 0.3% month-on-month in August versus expectations for a 0.3% decline, meaning sales were up 3.3% compared to the same month last year, well ahead of the 2.2% annual gain expected.
The ONS also revised up July's monthly sales up to 0.9% from 0.7%, with the annual gain revised up to 3.8% from 3.5%.
Sterling was also boosted by reports that Cabinet Office minister David Lidington said the UK government was close to a Brexit deal. Speaking to Irish radio, Lidington said Britain was 85% to 90% of the way to agreeing a Brexit deal and that this could be done by October or November.
But Donald Tusk, chief of the European Council, said Theresa May's Chequers proposal "will not work" as it risks undermining the EU's single market. But he said there was more goodwill, but the Irish border issue needed "tough, clear and precise guarantees...but our hope is we will be ready with this in October".
Market analyst Craig Erlam at Oanda said: "This is a perfect example of the kind of noise that’s impacting the markets at the moment despite not really offering anything of substance and giving any indication of whether talks are moving forward, which they don’t appear to be. But with the October and November meetings just around the corner, I don’t see this changing as traders try to get ahead of the curve."
Kathleen Brooks at Capital Index said the retail and other better economic data recent has boosted the chances of another rate hike from the Bank of England in February next year to more than 30%, a 10% jump in probability in a week.
"This has undoubtedly supported the pound’s recent rally. However, signs that the EU won’t give Theresa May what she wants could see a dramatic lowering in future rate hike expectations, as it is very unlikely that the BoE will hike rates if a ‘no deal Brexit’ is likely."
Meanwhile, investors appeared to be brushing aside any concerns about escalating trade tensions between the US and China.
Hussein Sayed, chief market strategist at FXTM, said: "The 10% tariffs imposed by the US on $200bn worth of Chinese goods seemed to be a relief rather than a catastrophe given that markets were bracing for a 25% figure. Similarly, the Chinese response was a softer hit than anticipated after announcing that the nation won’t engage in currency devaluation."
Miners gained again, with Fresnillo, Rio Tinto, Antofagasta and Anglo American to the fore. This was due to "optimism over a US-China deal at some stage and that China said they will not devalue the yuan," said Jamie Constable at N+1Singer.
Marks & Spencer, Next and Primark owner Associated British Foods were both trading higher after the retail sales data.
Luxury fashion retailer Burberry was under pressure, however, following the debut runway show from new creative director Riccardo Tisci on Monday. Societe Generale said the show was not as "streetwear-meets-avant-garde fashion, endorsed by a celebrity in the front row" as some had hoped.
Outside the FTSE 350, fashion retailer French Connection was under the cosh as it reported a widening of losses in the first half amid difficult trading in the UK.
Elsewhere, Rio Tinto advanced as it outlined its plans to return around $3.2bn to shareholders through a share buyback programme following the disposal of its coal assets.
Guinness maker Diageo rose after saying that its financial year has "started well", though it has been buffeted in recent weeks by increased emerging market foreign exchange volatility.
Shares in satellite operator Inmarsat rallied as it announced that it and Panasonic Avionics Corporation have agreed a strategic collaboration to provide in-flight broadband for commercial airlines.
Construction, services and property group Kier pushed as it posted a 9% rise in underlying full-year pre-tax profit thanks to a solid performance from all of its divisions and despite turbulence in its markets.
Just Group was given a leg up by RBC Capital Markets, as it said that a rights issue - which the share price is factoring in - will not be required.
IG Group tumbled after reporting a drop in first-quarter revenue as it took a hit from lower client activity and new EU regulatory measures.
British American Tobacco nudged lower as it announced that chief executive Nicandro Durante will retire next April after eight years in charge of the cigarette company, while Stobart slipped as it said full-year results for its energy division are likely to be below expectations due to delays in commissioning.
Saga fell as it announced the appointment of James Quin - formerly UK chief financial officer of Zurich Insurance Group - as group CFO with effect from 1 January 2019.
In broker note action, Aveva was lifted to 'overweight' at Barclays, while Gem Diamonds and Petra Diamonds were started at 'buy' and 'hold' respectively at Berenberg.
TP ICAP was upgraded to 'hold' at Shore Capital, while Boohoo was boosted to 'buy' by the same outfit and Weir was lifted to 'overweight' by Morgan Stanley.
GVC Holdings, Crest Nicholson, Drax, Petrofac, Rank Group, Redrow, Renishaw, Sanne, Sophos, Unite and International Public Partnerships were among the companies whose stock went ex-dividend.
Market Movers
FTSE 100 (UKX) 7,367.32 0.49%
FTSE 250 (MCX) 20,541.60 0.20%
techMARK (TASX) 3,487.06 0.04%
FTSE 100 - Risers
Associated British Foods (ABF) 2,285.00p 2.70%
Fresnillo (FRES) 847.60p 2.66%
Rio Tinto (RIO) 3,817.00p 2.54%
Antofagasta (ANTO) 858.00p 2.51%
St James's Place (STJ) 1,138.50p 2.43%
Relx plc (REL) 1,540.00p 2.43%
Anglo American (AAL) 1,695.40p 2.40%
Marks & Spencer Group (MKS) 285.70p 2.29%
Prudential (PRU) 1,763.50p 2.20%
Standard Chartered (STAN) 630.00p 2.02%
FTSE 100 - Fallers
Burberry Group (BRBY) 2,008.00p -4.88%
GVC Holdings (GVC) 971.00p -2.75%
Kingfisher (KGF) 242.70p -1.74%
BAE Systems (BA.) 628.80p -1.16%
Rightmove (RMV) 470.60p -1.13%
British American Tobacco (BATS) 3,521.00p -1.10%
Smith & Nephew (SN.) 1,370.00p -1.05%
BT Group (BT.A) 226.15p -0.94%
Sainsbury (J) (SBRY) 314.10p -0.88%
Bunzl (BNZL) 2,380.00p -0.87%
FTSE 250 - Risers
Games Workshop Group (GAW) 3,850.00p 6.65%
Just Group (JUST) 75.05p 5.41%
UDG Healthcare Public Limited Company (UDG) 664.00p 5.31%
Aveva Group (AVV) 2,978.00p 4.79%
Contour Global (GLO) 210.00p 3.86%
Cairn Energy (CNE) 223.20p 3.81%
Centamin (DI) (CEY) 100.70p 3.66%
Weir Group (WEIR) 1,797.00p 3.42%
Ferrexpo (FXPO) 177.30p 3.11%
HarbourVest Global Private Equity Limited A Shs (HVPE) 1,396.00p 2.80%
FTSE 250 - Fallers
IG Group Holdings (IGG) 779.50p -9.78%
Spire Healthcare Group (SPI) 155.50p -5.18%
Crest Nicholson Holdings (CRST) 362.80p -3.41%
Greencore Group (GNC) 177.00p -3.25%
Sirius Minerals (SXX) 29.18p -2.80%
Wizz Air Holdings (WIZZ) 3,078.00p -2.53%
Rank Group (RNK) 172.00p -2.49%
Redrow (RDW) 586.00p -2.25%
Diploma (DPLM) 1,394.00p -2.04%
Thomas Cook Group (TCG) 75.00p -1.96%