London midday: Stocks stay up as sterling falls on weak retail sales

(Sharecast News) - London stocks were still in the black by midday on Friday as weak retail sales figures weighed on sterling and boosted rate cut hopes. The FTSE 100 was up 0.4% at 7,491.24, while sterling was down 0.2% against the dollar at 1.2686.

A weaker pound tends to lift the top-flight index, as around 70% of its constituents derive their earnings from abroad.

Figures released earlier by the Office for National Statistics showed that retail sales volumes fell 3.2% on the month in December following a 1.4% increase the month before. This marked the worst decline since January 2021 and was much worse than the 0.5% drop forecast by economists.

Heather Bovill, deputy director for surveys and economic indicators at the ONS, said: "Food stores performed very poorly, with their steepest fall since May 2021 as early Christmas shopping led to slow December sales.

"Department stores, clothing shops and household goods retailers reported sluggish sales too as consumers spent less on Christmas gifts, but had also purchased earlier during Black Friday promotions, to help spread the cost.

"The longer-term picture remains subdued, with quarterly sales dipping, while annual sales volumes fell for the second consecutive year, to their lowest level in five years."

Joshua Mahony, chief market analyst at Scope Markets, said: "For markets, the decline in retail sales does reverse some of the repricing around the May rate cut that occurred after Wednesday's surprise rise in CPI inflation.

"Markets currently price a 48% chance of a rate cut in May, with today's retail sales figure only moderately easing back that shift in expectations that saw a sharp swing from the lofty 70% figure seen earlier in the week."

On the corporate front, 4imprint Group surged after the promotional merchandise maker said it expected annual earnings to be slightly above forecasts after a strong trading performance during 2023. Group revenue was forecast to rise 16% to $1.33bn with pre-tax profit of at least $140m, slightly above the upper end of the current range of analysts' forecasts and 2022's $104m.

Persimmon gained as Morgan Stanley double upgraded shares of the housebuilder to 'overweight' from 'underweight' and upped the price target 1,685p from 1,131p. It noted that Persimmon's niche is affordable homes on a UK-wide basis, and its underweight thesis was partly based on rising affordability risks.

"As mortgage rates fall, and affordability improves, we think the business presents the best leverage to a volume recovery of the stocks under our coverage," MS said.

Takeaway delivery company Deliveroo rose as it said annual earnings would be "slightly" ahead of guidance, with gross transaction value (GTV) up 7% year-on-year in the UK and Ireland, despite the cost-of-living crisis.

Legan & General and Just Group both advanced as JPMorgan reiterated its 'overweight' stance on both insurers.

Endeavour Mining was in focus as it said former chief executive Sébastien de Montessus, who was abruptly sacked earlier this month for serious misconduct, will miss out on $17.6m in bonuses and share awards. Furthermore, the company said it is clawing back an additional $11.5m in share awards and bonuses paid in respect of the past three years' service.

Outside the FTSE 350, logistics firm Wincanton rocketed after agreeing to be taken private by Ceva Logistics, a subsidiary of French shipping specialist CMA CGM, in a £566.9m deal.

Market Movers

FTSE 100 (UKX) 7,491.24 0.43% FTSE 250 (MCX) 18,988.53 0.21% techMARK (TASX) 4,335.44 0.53%

FTSE 100 - Risers

Flutter Entertainment (CDI) (FLTR) 15,720.00p 3.25% Persimmon (PSN) 1,465.50p 2.84% Pershing Square Holdings Ltd NPV (PSH) 3,608.00p 2.15% AstraZeneca (AZN) 10,606.00p 1.67% CRH (CDI) (CRH) 5,486.00p 1.67% InterContinental Hotels Group (IHG) 7,450.00p 1.44% Rentokil Initial (RTO) 400.10p 1.42% Vodafone Group (VOD) 66.82p 1.38% Smith & Nephew (SN.) 1,112.00p 1.32% British American Tobacco (BATS) 2,318.00p 1.27%

FTSE 100 - Fallers

Whitbread (WTB) 3,598.00p -1.02% Rolls-Royce Holdings (RR.) 303.40p -1.01% Glencore (GLEN) 415.85p -0.95% Kingfisher (KGF) 217.80p -0.91% St James's Place (STJ) 631.60p -0.88% Entain (ENT) 941.40p -0.86% Pearson (PSON) 949.80p -0.84% Sage Group (SGE) 1,151.50p -0.78% Associated British Foods (ABF) 2,256.00p -0.62% Ocado Group (OCDO) 568.00p -0.60%

FTSE 250 - Risers

4Imprint Group (FOUR) 5,200.00p 12.19% Watches of Switzerland Group (WOSG) 389.80p 4.95% Syncona Limited NPV (SYNC) 124.00p 3.16% Me Group International (MEGP) 123.60p 2.49% Hochschild Mining (HOC) 86.75p 1.88% Crest Nicholson Holdings (CRST) 207.20p 1.87% Keller Group (KLR) 879.00p 1.85% RHI Magnesita N.V. (DI) (RHIM) 3,324.00p 1.84% Mobico Group (MCG) 84.40p 1.69% Aberforth Smaller Companies Trust (ASL) 1,342.00p 1.67%

FTSE 250 - Fallers

Currys (CURY) 47.16p -4.50% Ferrexpo (FXPO) 80.95p -4.37% Diversified Energy Company (DEC) 921.50p -3.51% Darktrace (DARK) 350.50p -2.34% Vistry Group (VTY) 921.00p -2.33% Quilter (QLT) 97.05p -1.77% Dr. Martens (DOCS) 73.05p -1.68% AJ Bell (AJB) 309.00p -1.53% International Distributions Services (IDS) 247.40p -1.47% Wizz Air Holdings (WIZZ) 1,946.50p -1.47%