London close: Stocks finish firmer after big week for data, earnings

(Sharecast News) - London stocks closed above the waterline on Friday, as investors mulled the latest UK retail sales and business activity figures.
The FTSE 100 ended the session up 0.85% at 7,027.58, and the FTSE 250 was 0.91% firmer at 22,883.39.

Sterling was going the other way, however, last trading 0.07% lower on the dollar at $1.3739, and slipping 0.01% against the euro at €1.1696.

"The post-Monday rally shows no sign of slowing down, and instead stocks seem determined to power ahead into the weekend and beyond," said IG chief market analyst Chris Beauchamp.

"The Monday selloff seems like a moment of brief panic, and while it was startlingly short-lived, it was enough to reset sentiment and activity and prompt a resurgence of bullish momentum."

Beauchamp said central banks had done their bit to allay fears, most notably the European Central Bank, but he added that now the reappointment of Jerome Powell was more assured, markets seemed "much more relaxed" about the outlook for US policy as well.

"The drumbeat of earnings season continues to provide a positive underpinning too, as US firms continue to provide optimistic outlooks and strong earnings reports as well."

On home shores, data released earlier by the Office for National Statistics showed retail sales rose between May and June, helped along by the Euros.

Sales were up 0.5%, coming in a touch above consensus expectations for 0.4% growth; compared with their pre-pandemic February 2020 levels, sales were 9.5% higher.

The largest contribution came from food stores, which saw sales volumes rise 4.2%, with the ONS noting that anecdotal evidence suggested the increase was linked to the start of the Euro 2020 football championship.

On the other hand, non-food stores saw sales volumes drop 1.7%, which was their first fall on the month since January 2021.

Meanwhile, fuel sales increased 2.3% from May as people travelled more thanks to easing restrictions, but remained 2.1% below their pre-pandemic levels.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the temporary boost to food spending from Euros would fade, while higher confidence did not appear to be translating to higher levels of economic activity, due to the recent rise in Covid-19 cases.

Separate data showed business activity growth slowed in July, with private sector growth hitting a four-month low as shortages of staff and materials held back the recovery.

The flash IHS Markit composite output index - which measures activity in the services and manufacturing sectors - fell to 57.7 from 62.2 in June.

That marked the lowest level reading since the easing of lockdown restrictions began in March.

The manufacturing purchasing managers' index printed at 60.4 in July, down from 63.9 the month before.

Services, meanwhile, came in at a four-month low of 57.8, compared to 62.4 in June.

Survey respondents highlighted severe shortages of raw materials and the impact of Covid-19 isolation on staff availability.

"July saw the UK economy's recent growth spurt stifled by the rising wave of virus infections, which subdued customer demand, disrupted supply chains and caused widespread staff shortages, and also cast a darkening shadow over the outlook," said Chris Williamson, chief business economist at IHS Markit.

"Although business activity continued to grow, aided by the easing of lockdown restrictions to the lowest since the pandemic began, the rate of expansion slowed sharply to the weakest since March."

In equity markets, Ultra Electronics rocketed 32.39% after the defence company said it was minded to recommend a £2.58bn takeover bid from Cobham to shareholders.

Cobham, owned by US private-equity firm Advent International, has offered £35 a share, a 42% premium to Ultra's share price of £24.70 on Thursday.

Telecoms operator Vodafone Group rallied 2.45% after it reported a rise in first-quarter revenue as European and African services returned to growth.

Beazley was ahead 5.82% after it swung to a profit in the first half of the year as premium rates improved across its divisions, while wealth manager Brewin Dolphin pushed 1.84% higher as it reported an increase in quarterly net inflows.

Mr Kipling and Bisto owner Premier Foods also advanced, adding 4.76%, after it said full-year adjusted pre-tax profit was set to be at the top end of its expectations after "a very encouraging start to the year".

Market Movers

FTSE 100 (UKX) 7,027.58 0.85%
FTSE 250 (MCX) 22,883.39 0.91%
techMARK (TASX) 4,492.87 1.63%

FTSE 100 - Risers

Intermediate Capital Group (ICP) 2,238.00p 2.66%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,100.00p 2.59%
3i Group (III) 1,296.00p 2.57%
Burberry Group (BRBY) 2,112.00p 2.53%
NATWEST GROUP PLC ORD 100P (NWG) 199.10p 2.52%
Vodafone Group (VOD) 118.84p 2.41%
Melrose Industries (MRO) 158.30p 2.39%
Unilever (ULVR) 4,146.50p 2.31%
Weir Group (WEIR) 1,902.00p 2.18%
Pershing Square Holdings Ltd NPV (PSH) 2,635.00p 1.93%

FTSE 100 - Fallers

Fresnillo (FRES) 745.60p -1.69%
International Consolidated Airlines Group SA (CDI) (IAG) 168.26p -1.13%
Polymetal International (POLY) 1,520.50p -0.94%
Flutter Entertainment (CDI) (FLTR) 12,875.00p -0.85%
Sainsbury (J) (SBRY) 279.10p -0.57%
Ashtead Group (AHT) 5,650.00p -0.56%
Aviva (AV.) 385.20p -0.54%
Scottish Mortgage Inv Trust (SMT) 1,345.50p -0.44%
British Land Company (BLND) 504.20p -0.36%
Associated British Foods (ABF) 2,040.00p -0.24%

FTSE 250 - Risers

Ultra Electronics Holdings (ULE) 3,270.00p 32.39%
Beazley (BEZ) 382.50p 5.96%
Premier Foods (PFD) 110.40p 4.76%
Rank Group (RNK) 165.20p 3.77%
Dixons Carphone (DC.) 125.30p 3.72%
Lancashire Holdings Limited (LRE) 659.00p 3.63%
HGCapital Trust (HGT) 387.50p 3.60%
Avon Protection (AVON) 2,656.00p 3.59%
Auction Technology Group (ATG) 1,318.00p 3.30%
Pets at Home Group (PETS) 488.60p 3.25%

FTSE 250 - Fallers

Fidelity China Special Situations (FCSS) 373.00p -4.13%
Indivior (INDV) 150.00p -2.98%
Centrica (CNA) 48.04p -2.56%
4Imprint Group (FOUR) 2,585.00p -2.47%
Wood Group (John) (WG.) 209.30p -2.29%
Vietnam Enterprise Investments (DI) (VEIL) 662.00p -2.21%
Centamin (DI) (CEY) 100.30p -1.86%
Cineworld Group (CINE) 63.54p -1.80%
XP Power Ltd. (DI) (XPP) 5,000.00p -1.77%
Mitie Group (MTO) 62.20p -1.58%