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London open: Stocks slump despite better-than-expected retail sales

By Michele Maatouk

Date: Friday 24 Mar 2023

London open: Stocks slump despite better-than-expected retail sales

(Sharecast News) - London stocks fell in early trade on Friday despite an unexpected uptick in retail sales and better-than-expected consumer confidence data, with banks under pressure again.
At 0830 GMT, the FTSE 100 was down 1.1% at 7,420.27.

Investors were digesting comments from Bank of England governor Andrew Bailey, who told the BBC that interest rates will have to rise again if firms increase prices, a day after the Bank hiked rates for the eleventh time in a row.

Data released earlier by the Office for National Statistics showed that retail sales rose more than expected in February.

Retail sales volumes were estimated to have grown by 1.2% month-to-month, following upwardly-revised growth of 0.9% in January.

It is the largest monthly increase since October 2022, which benefited from the additional bank holiday for the Queen's state funeral, and returns sales volumes to February 2020, pre-pandemic. Analysts had been expected a rise of just 0.2%.

Year-on-year, sales volumes were down 3.5%, and off 0.3% in the three months to February when compared to the previous quarter.

Driving February's increase were non-food sales, up 2.4% compared to January's 1.0% rise. Within that, sales in department stores rose 5.5% while clothing shops saw a 2.9% jump. The ONS attributed growth in both sub-sectors to strong sales at discount stores.

There was also strong growth in second-hand goods stores, the ONS noted, such as auction houses and charity shops.

Food sales volumes rose 0.9% compared to 0.1% in January. The ONS said there was some anecdotal evidence of reduced spending in restaurants and on takeaways, because of cost of living pressures.

Separately, a survey from GfK showed that consumer confidence nudged higher in March despite ongoing cost of living pressures.

The latest GfK consumer confidence index was -36, up two points on February and the third consecutive month it has strengthened.

Within that, expectations for the general economic situation over the next 12 months rose three points to -40, while the major purchase index increased by four to -33.

However, expectations for households' personal finance situation fell by three points to -21. It remains three points weaker than March 2022.

In equity markets, Barclays, NatWest, HSBC and Lloyds were in the red again amid lingering concerns over the banking sector.

Neil Wilson, chief market analyst at Markets.com, said: "Contagion fears are not yet going away - bank shares are lower again this morning and weighing on broader sentiment. Yesterday we witnessed Deutsche Bank credit default swaps blow out and shares this morning are down 6%. UBS shares fell more than 7%. UBS and Credit Suisse are facing a DoJ investigation over Russian oligarch links.

"Bill Winters at Standard Chartered says the decision to wipe out CS AT1 bonds will have profound consequences...always the unanticipated consequences of intervention - in this case it's Merton's reason number three: Immediate interests overriding long-term interests."

Elsewhere, travel firm Tui tumbled after it announced a €1.8bn fund raising to help cut debt and reduce interest costs.

Pub chain JD Wetherspoon gained ground as it said sales for the last seven weeks were 14.9% higher than the same period last year as it swung to a half-year profit despite "ferocious" inflationary pressures. The company posted a pre-tax profit of £4.6m for the 26 weeks to January 29, compared to a £26.1m loss in 2022.

Smiths Group rallied as it reported a jump in first-half profit and lifted its guidance for FY2023.

Market Movers

FTSE 100 (UKX) 7,420.27 -1.06%
FTSE 250 (MCX) 18,571.94 -0.84%
techMARK (TASX) 4,515.67 -0.66%

FTSE 100 - Risers

Smiths Group (SMIN) 1,740.00p 1.43%
Reckitt Benckiser Group (RKT) 6,008.00p 0.40%
British American Tobacco (BATS) 2,834.00p 0.37%
BAE Systems (BA.) 975.80p 0.08%
Diageo (DGE) 3,561.50p -0.04%
London Stock Exchange Group (LSEG) 7,776.00p -0.05%
Pershing Square Holdings Ltd NPV (PSH) 2,795.00p -0.18%
Weir Group (WEIR) 1,796.50p -0.19%
Bunzl (BNZL) 3,040.00p -0.23%
Relx plc (REL) 2,577.00p -0.23%

FTSE 100 - Fallers

Barclays (BARC) 135.52p -3.05%
Ocado Group (OCDO) 435.00p -2.77%
GSK (GSK) 1,398.40p -2.74%
3i Group (III) 1,543.00p -2.56%
Prudential (PRU) 1,040.00p -2.44%
NATWEST GROUP (NWG) 261.60p -2.42%
International Consolidated Airlines Group SA (CDI) (IAG) 136.22p -2.25%
CRH (CDI) (CRH) 3,957.00p -2.25%
Rolls-Royce Holdings (RR.) 144.04p -2.24%
Smurfit Kappa Group (CDI) (SKG) 2,859.00p -2.09%

FTSE 250 - Risers

Wetherspoon (J.D.) (JDW) 620.50p 6.80%
Bridgepoint Group (Reg S) (BPT) 213.00p 3.80%
Warehouse Reit (WHR) 98.50p 3.25%
Bytes Technology Group (BYIT) 394.60p 3.14%
Renishaw (RSW) 4,138.00p 2.02%
Big Yellow Group (BYG) 1,160.00p 1.93%
Pets at Home Group (PETS) 361.80p 1.40%
Sirius Real Estate Ltd. (SRE) 73.00p 1.39%
Hunting (HTG) 241.00p 1.26%
Supermarket Income Reit (SUPR) 87.00p 1.16%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 1,301.00p -7.96%
Wizz Air Holdings (WIZZ) 2,611.00p -4.32%
TBC Bank Group (TBCG) 2,150.00p -3.59%
Intermediate Capital Group (ICP) 1,172.00p -3.58%
AJ Bell (AJB) 328.40p -3.53%
IWG (IWG) 146.10p -3.12%
Ninety One (N91) 176.00p -2.92%
Hammerson (HMSO) 22.05p -2.78%
Trainline (TRN) 261.80p -2.71%
Vistry Group (VTY) 734.50p -2.52%


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