London midday: Stocks pare gains as investors mull inflation, retail sales data
London stocks had pared gains by midday on Wednesday as enthusiasm about a $2 trillion US rescue package faded, and following the release of uninspiring data.
Stocks had kicked the session off firmly in the green on news that White House and Senate leaders had agreed a package to help prop up the US economy during the coronavirus pandemic. However, by midday, the FTSE 100 was trading up just 0.2% at 5,457.03.
Spreadex analyst Connor Campbell said that if the measures announced in the last few days - "that is, the Fed’s unlimited QE and this $2 trillion plan - don’t create a sustained rebound, it is unclear what will".
"There are always the plans the G7 hinted at on Tuesday, though given the level of international co-operation required for that, who knows when they will materialise," he added.
Investors were mulling over the latest UK inflation data, which showed that consumer price inflation fell to 1.7% in February from 1.8% in January, in line with consensus expectations. However, core inflation rose to 1.7% from 1.6%, coming in above consensus expectations of 1.5%.
Ruth Gregory, senior UK economist at Capital Economics, said the decline in CPI inflation "is a small sign of things to come".
"We expect the effects of the coronavirus crisis to drag inflation below 1.0% in the months ahead."
Market participants were also digesting the latest survey from the Confederation of British Industry, which showed that the retail sales outlook for April was the worst it has been since 2009. The reported sales balance dropped to -3 in March from +1 in February, coming in above consensus expectations for a reading of -15. However, the expected reading for April is -26 - the lowest since April 2009.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The CBI’s survey suggests that stockpiling of food in response to Covid-19 cushioned the blow to overall retail sales from falling demand for non-essential items in early March, though sales almost certainly have collapsed since then."
He added that unprecedented falls in sales lie ahead, pointing out that the latest survey closed on 13 March, ten days before the government ordered the closure of all shops, except supermarkets and pharmacies, and told all but critical workers to stay at home.
On the corporate front, there was another string of Covid-19 updates, with dividend suspensions galore again.
Rentokil International said it was cancelling its dividend and cutting pay in an effort to conserve more than £500m in cash to strengthen its finances against the Covid-19 crisis. The pest control and hygiene services company said it took the actions after the virus had a greater impact on its business in the past 10 days.
Housebuilder Bellway will postpone its interim dividend, it said, as it warned of a slowdown in demand due to the coronavirus and subsequent government-ordered lockdown. Fellow housebuilder Persimmon said it had begun the orderly shutdown of its construction sites and closed all of its sales sites, as it announced the cancellation of its dividend.
Construction and regeneration company Morgan Sindall withdrew its guidance and warned on profits as it said the pandemic was disrupting operations.
Waste management company Biffa cancelled its dividend and said it will not be providing any guidance for FY21 as it expects the Covid-19 outbreak to cause "significant" to its operations.
There were many more warnings, from the likes of
FTSE 100 - Risers
JD Sports Fashion (JD.) 479.00p 10.85%
Associated British Foods (ABF) 1,764.00p 9.74%
Royal Bank of Scotland Group (RBS) 131.75p 9.56%
Phoenix Group Holdings (PHNX) 609.40p 9.31%
Intermediate Capital Group (ICP) 868.50p 8.97%
M&G (MNG) 151.10p 8.71%
ITV (ITV) 64.84p 8.07%
International Consolidated Airlines Group SA (CDI) (IAG) 231.50p 7.42%
Whitbread (WTB) 2,875.00p 6.88%
Legal & General Group (LGEN) 172.55p 6.81%
FTSE 100 - Fallers
Rentokil Initial (RTO) 307.20p -17.06%
Melrose Industries (MRO) 98.22p -4.96%
DCC (DCC) 4,653.00p -4.81%
Imperial Brands (IMB) 1,268.20p -4.79%
Spirax-Sarco Engineering (SPX) 8,150.00p -4.73%
Smurfit Kappa Group (SKG) 2,140.00p -4.46%
Land Securities Group (LAND) 586.20p -4.34%
Ocado Group (OCDO) 1,199.00p -4.12%
CRH (CRH) 1,891.50p -3.98%
HSBC Holdings (HSBA) 494.75p -3.93%
FTSE 250 - Risers
Marston's (MARS) 41.36p 33.68%
Virgin Money UK (VMUK) 71.76p 23.05%
William Hill (WMH) 65.42p 17.87%
National Express Group (NEX) 157.90p 17.57%
Aston Martin Lagonda Global Holdings (AML) 249.60p 15.34%
Pollen Street Secured Lending (PSSL) 570.00p 14.00%
Trainline (TRN) 271.00p 12.92%
Cineworld Group (CINE) 60.04p 12.52%
Henderson Smaller Companies Inv Trust (HSL) 632.00p 12.46%
Avast (AVST) 374.20p 11.17%
FTSE 250 - Fallers
Biffa (BIFF) 195.00p -14.47%
Senior (SNR) 71.25p -9.06%
Diploma (DPLM) 1,303.00p -9.01%
Cairn Energy (CNE) 82.40p -7.68%
Countryside Properties (CSP) 270.80p -6.88%
Petropavlovsk (POG) 20.05p -6.53%
Marshalls (MSLH) 642.00p -6.21%
Essentra (ESNT) 228.00p -5.47%
Avon Rubber (AVON) 2,425.00p -5.27%
Ferrexpo (FXPO) 117.15p -5.06%