London close: Shares advance on rate cut speculation and after Chinese data
Share prices jumped at the end of the week, amid mounting speculation of an upcoming cut to Bank Rate and stoked by a raft of better-than-expected economic data out of the People's Republic of China.
The FTSE 100 was up 0.85% at 7,674.56, while the pound was down 0.39% against the US dollar at 1.3026 after data from the Office for National Statistics showed that UK retail sales unexpectedly fell in December.
Commenting on the day's price action, IG's Josh Mahony told clients: "The FTSE 100 has seen a sharp surge as we close out the week, with the growing prospect of a rate rise from the BoE helping drive the pound lower.
"Rounding off a week which has seen rate cut expectations soar, the release of a hugely disappointing retail sales number for December provided yet another reason to expect action from Carney and co.."
According to the Office for National Statistics, UK retail sales declined at a month-on-month clip of 0.6%, missing expectations of a 0.5% increase by a wide margin. On the year, meanwhile, sales rose 0.9%, coming in below expectations of a 2.6% jump.
In the three months to December, retail sales fell 1% compared to the previous three-month period, marking the worst fall since March 2017. Food, clothing and department store sales all declined.
ONS head of retail sales Rhian Murphy said: "Retail sales fell sharply in the latest three months with almost all sectors showing a decline.
"The longer-term picture is still one of growth, although it has slowed considerably in recent months.
"December was the fifth consecutive month with no growth as food stores suffered particularly poor sales, showing the steepest fall for three years."
Ayush Ansal, chief investment officer at Crimson Black Capital, said: "In a week that saw GDP data lurch towards stagnation and inflation fall sharply, the market’s conclusion is likely to be that the Bank of England will respond with monetary stimulus.
"With the UK economy drifting and no sign yet of a ‘Boris bounce’ feeding through into consumer confidence, the lack of inflationary pressure could easily persuade the Bank of England that the time is right to inject some zip into the economy with a rate cut, and sterling is likely to recalibrate accordingly.
"A string of major high street names have reported poor sales in what would normally be a boom month, and so the debate about whether December’s weakness is the fallout from increased spending in November’s Black Friday is pretty moot."
Earlier, data out of China showed the economy grew in 2019 at the slowest pace in nearly 30 years. However, there were some bright spots, as December industrial production, retail sales and fixed asset investment figures all beat market expectations.
"External headwinds should ease further in the coming quarters thanks to the 'Phase One' trade deal and a recovery in global growth. But we think this will be offset by a renewed slowdown in domestic demand, triggering further monetary easing by the People's Bank [of China]," said Julian Evans-Pritchard at Capital Economics.
In equity markets, British Airways and Iberia parent IAG flew to the top of the FTSE 100 after ditching its own rule to impose a limit on non-EU shareholders.
UAE healthcare operator NMC Health was a high riser after saying it had appointed a former US federal judge and FBI director to look into allegations made against the company by US research firm Muddy Waters.
Food producer Cranswick rallied after saying it expects full-year adjusted pre-tax profit to be higher than current market forecasts.
Ashtead and British Land were boosted by upgrades at Morgan Stanley and Goldman Sachs, respectively.
On the downside, Hastings was sharply lower after the insurer warned on profits and said it would cut its dividend following elevated claims costs in the fourth quarter. The company also pointed to higher repair and third party credit hire costs, slightly higher winter frequencies than the prior year, and a small number of larger bodily injury losses.
Whitbread was weaker after a downgrade to ‘underperform’ at Bernstein and TUI retreated after an initiation at ‘sell’ at Goldman Sachs.
FTSE 100 - Risers
NMC Health (NMC) 1,557.50p 8.05%
Evraz (EVR) 418.00p 6.38%
Ashtead Group (AHT) 2,554.00p 5.15%
International Consolidated Airlines Group SA (CDI) (IAG) 671.00p 5.11%
Pearson (PSON) 588.60p 4.47%
Anglo American (AAL) 2,246.00p 3.22%
Rio Tinto (RIO) 4,651.00p 2.75%
Hikma Pharmaceuticals (HIK) 1,955.50p 2.36%
BHP Group (BHP) 1,851.60p 2.30%
Centrica (CNA) 92.86p 2.22%
FTSE 100 - Fallers
Whitbread (WTB) 4,481.00p -2.31%
Flutter Entertainment (FLTR) 9,066.00p -1.24%
Smurfit Kappa Group (SKG) 2,718.00p -1.24%
Barclays (BARC) 175.24p -0.88%
Vodafone Group (VOD) 154.38p -0.84%
Sage Group (SGE) 734.20p -0.68%
Royal Dutch Shell 'B' (RDSB) 2,265.00p -0.35%
Johnson Matthey (JMAT) 2,841.00p -0.35%
easyJet (EZJ) 1,477.50p -0.34%
BP (BP.) 496.40p -0.29%
FTSE 250 - Risers
Cranswick (CWK) 3,714.00p 9.36%
Games Workshop Group (GAW) 7,005.00p 4.63%
Finablr (FIN) 136.40p 4.12%
Just Group (JUST) 72.85p 4.07%
Pantheon International (PIN) 2,490.00p 3.53%
Moneysupermarket.com Group (MONY) 332.60p 3.42%
SIG (SHI) 97.25p 2.91%
John Laing Group (JLG) 390.00p 2.85%
Oxford Instruments (OXIG) 1,598.00p 2.70%
Derwent London (DLN) 4,178.00p 2.70%
FTSE 250 - Fallers
Restaurant Group (RTN) 136.30p -7.53%
Aston Martin Lagonda Global Holdings (AML) 452.00p -7.19%
Hastings Group Holdings (HSTG) 177.40p -4.21%
Tullow Oil (TLW) 53.36p -3.68%
William Hill (WMH) 182.25p -2.98%
GVC Holdings (GVC) 910.60p -2.48%
Bank of Georgia Group (BGEO) 1,581.00p -2.41%
C&C Group (CCR) 376.00p -2.21%
Galliford Try (GFRD) 142.00p -2.12%
Daejan Holdings (DJAN) 5,280.00p -1.86%