London close: Stocks higher as global inflation fears subside
London stocks managed a positive finish on Friday, joining global markets for an end-of-week bounceback, as worries about inflation eased.
The FTSE 100 ended the session up 1.15% at 7,043.61, and the FTSE 250 finished 1.21% stronger at 22,336.10.
Sterling was in a mixed state, meanwhile, last trading 0.23% stronger on the dollar at $1.4085, while weakening 0.2% against the euro to change hands at €1.1609.
“It looks like a positive end to the week is in sight for risk assets, which have recovered from their inflation panic 48 hours ago,” said IG chief market analyst Chris Beauchamp.
“Stocks are advancing on a broad front, with advancers far outpacing the decliners in both New York and London.
“Yet again what had threatened to turn into a more dramatic selloff has been neutered, dip buyers seemingly as keen as ever to hit the button and jump in on any weakness.”
Beauchamp said 2021 was still resembling 2017 in the “smallness of its pullbacks”, combined with a declining VIX that revealed the extent to which investors were willing to take on risk.
“A lot of this depends on the current inflation outlook remaining firmly under control, but the spike in today’s Michigan confidence inflation expectations number should be viewed as a warning that consumers are worried about inflation, and the Fed needs to remain aware of that even if it leaves policy settings unchanged.”
Data out from across the Atlantic earlier in the afternoon showed US retail sales slowing in April, after the initial effect of the White House's Covid-19 stimulus checks faded.
According to the Commerce Department, advance retail sales were flat last month, making for a marked change when compared to estimates for a gain of 0.8% and March's upwardly-revised 10.7% surge.
However, with US households accumulating at least $2.3trn in excess savings during the Covid-19 pandemic and a rapidly reopening economy, an acceleration was seen to be on the horizon.
Sales at automotive and parts dealers were up 2.9% as a shortage of available vehicles led to increased prices, while restaurant and bar sales expanded 3%, indicating that what has been the industry hardest hit by the coronavirus was beginning to recover amid an easing of restrictions.
Richard Hunter, head of markets at Interactive Investor, said earlier that the figures would “give further colour to the increasing strength of the US recovery, as fiscal stimulus and a further easing of Covid-19 restrictions improves the mood of a vitally important component of the economy”.
Back in Britain, UK vaccines minister Nadhim Zahawi said before lunch that the government was gearing up to "flex" its inoculation program in order to tackle the new coronavirus variant first detected in India.
Local lockdowns in areas where that variant was most present were another possibility, although the next phase for easing restrictions in England, due to start from 17 May, was still set to go ahead, he added.
Speaking to the BBC, the minister said that there would be a surge in vaccinations and testing in areas where that specific variant was spreading.
At the same time, the Department of Health and Social Care announced on Thursday that a new "surge rapid response" team of 100 staff would be deployed to Bolton, where the B1.617.2 variant was already rapidly spreading.
“While there is no firm evidence yet to show this variant has any greater impact on severity of disease or evades the vaccine, the speed of growth is concerning and the government is considering additional action if deemed necessary, including how to best utilise the vaccine roll-out to best protect the most vulnerable in the context of the current epidemiology,” the DHSC said in its statement.
In equity markets, business software group Sage closed up 3.82% after saying it expected annual organic revenue growth to be near the top of its guidance after investment in its cloud operation prompted a decline in first-half profit.
Sanne rocketed 21.23% after it rejected an 830p a share bid from private equity firm Cinven.
“The offer from Cinven represents a healthy 38% premium to the closing price last night, and might usually have been seen as pretty tempting,” said Nicholas Hyett, equity analyst at Hargreaves Lansdown.
“However, the shares were trading at that price on the market four years ago and the board clearly thinks the business is worth more.
“The market though is less sure.”
On the downside, miners retreated as copper and iron ore prices fell back, with Rio Tinto down 2.68%, Antofagasta losing 2.17%, and BHP off 1.29%, although Glencore managed to claw back earlier losses to close up 0.06%.
FTSE 100 - Risers
M&G (MNG) 236.10p 7.32%
SSE (SSE) 1,535.50p 6.04%
Scottish Mortgage Inv Trust (SMT) 1,130.50p 4.92%
Whitbread (WTB) 3,187.00p 4.02%
Ashtead Group (AHT) 4,988.00p 3.90%
3i Group (III) 1,244.50p 3.88%
Intermediate Capital Group (ICP) 2,057.00p 3.58%
Sage Group (SGE) 647.40p 3.52%
InterContinental Hotels Group (IHG) 4,977.00p 3.43%
Spirax-Sarco Engineering (SPX) 12,180.00p 3.40%
FTSE 100 - Fallers
Rio Tinto (RIO) 6,135.00p -6.69%
BHP Group (BHP) 2,222.50p -5.20%
Antofagasta (ANTO) 1,778.00p -4.41%
BT Group (BT.A) 161.70p -4.35%
Anglo American (AAL) 3,265.00p -3.95%
Glencore (GLEN) 324.60p -2.55%
Hargreaves Lansdown (HL.) 1,732.00p -2.26%
Evraz (EVR) 666.40p -2.11%
Fresnillo (FRES) 884.40p -1.29%
Polymetal International (POLY) 1,599.00p -0.71%
FTSE 250 - Risers
Sanne Group (SNN) 731.00p 19.44%
NCC Group (NCC) 294.50p 15.94%
Baillie Gifford US Growth Trust (USA) 293.50p 9.11%
Drax Group (DRX) 430.00p 7.45%
Man Group (EMG) 171.40p 6.33%
Watches of Switzerland Group (WOSG) 703.00p 5.89%
Allianz Technology Trust (ATT) 260.00p 5.69%
Elementis (ELM) 147.30p 5.14%
Brewin Dolphin Holdings (BRW) 344.50p 5.03%
Trainline (TRN) 441.00p 4.91%
FTSE 250 - Fallers
Hochschild Mining (HOC) 188.20p -6.09%
Ferrexpo (FXPO) 474.00p -5.39%
Wood Group (John) (WG.) 271.10p -4.94%
Cairn Energy (CNE) 166.00p -3.44%
BlackRock World Mining Trust (BRWM) 652.00p -3.41%
Grainger (GRI) 283.80p -3.32%
Helios Towers (HTWS) 164.40p -3.07%
TI Fluid Systems (TIFS) 285.00p -2.90%
Clarkson (CKN) 2,860.00p -2.74%
Morgan Sindall Group (MGNS) 2,205.00p -2.65%