London open: Stocks fall after retail sales, borrowing data

Opening Market Report
07:21, 22nd January 2021

(Sharecast News) - London equity markets fell in early trade on Friday as investors digested disappointing UK data, with travel and leisure shares under the cosh.
At 0840 GMT, the FTSE 100 was 0.4% lower at 6,690.01, while the pound was down 0.6% against the dollar at 1.3658, having hit its best level on Thursday since spring 2008.

Richard Hunter, head of markets at Interactive Investor, said: "Markets have stumbled at the end of a generally directionless week.

"The wave of optimism which had gripped the US markets the previous day, as the inauguration of the new President passed without incident, and as investors took hope from some positive political noises around the stimulus package, subsided."

Market participants were mulling over the latest figures from the Office for National Statistics, which showed retail sales suffered their biggest ever year-on-year fall in 2020 as the Covid-19 pandemic took its toll.

Sales declined 1.9% last year compared with 2019. Clothing retailers in particular fared badly, with a record annual fall of more than 25%, while restrictions on movement led to a record year-on-year decline for fuel sales.

Lockdowns and restrictions boosted online sales, however, which surged 46.1% on the year in 2020 - the highest annual growth reported since 2008.

ONS deputy national statistician for Economic Statistics, Jonathan Athow, said: "Some sectors were able to buck the trend in 2020. The increased popularity of click and collect and people buying more items from home led to a strong year for overall internet sales, with record highs for food and household goods sales online."

In December, sales rose 0.3% on the month, which was an improvement on the 4.1% drop seen in November but undershot expectations for a 1.2% jump. This left sales up 2.7% compared with February's pre-lockdown level.

Clothing sales pushed up 21.5% in December, recovering from a 19.6% slump the month before when non-essential retailers were closed due to lockdown restrictions. Non-essential retailers were allowed to open again in early December, albeit not for long.

Separate data showed the UK borrowed £34.1bn in December, exceeding forecasts and recording the highest level for that month on record as Covid-19 forced the government to issue more debt.

Public sector net borrowing was £28.2bn more than a year earlier, the third-highest month on record and the highest December figure since records began in 1993, the ONS said. Economists had on average expected borrowing of £32bn.

In equity markets, travel and leisure stocks with particular exposure to the Covid-19 pandemic and related restrictions took a hit. British Airways parent IAG, Premier Inn owner Whitbread, travel company TUI, Upper Crust owner SSP, budget airline easyJet and Cineworld were all weaker.

Mediclinic International was trading lower even as it said third-quarter revenue rose 2.5% as the private healthcare group experienced unusually high inpatient levels in southern Africa and the Middle East.

On the upside, dollar-earners rallied as sterling weakened, with drinks maker Diageo and equipment rental firm Ashtead the top risers.

Kainos surged after the IT provider lifted full-year guidance as it reported strong trading momentum towards the end of 2020.

Computacenter gained as it lifted its full-year profit guidance after trading continued strongly until the end of the year.

Market Movers

FTSE 100 (UKX) 6,690.01 -0.38%
FTSE 250 (MCX) 20,749.10 -0.21%
techMARK (TASX) 4,182.10 0.12%

FTSE 100 - Risers

Diageo (DGE) 2,954.50p 1.56%
Ashtead Group (AHT) 3,805.00p 1.20%
Pershing Square Holdings Ltd NPV (PSH) 2,695.00p 1.13%
Hikma Pharmaceuticals (HIK) 2,562.00p 1.07%
B&M European Value Retail S.A. (DI) (BME) 519.40p 1.01%
Halma (HLMA) 2,585.00p 0.94%
Relx plc (REL) 1,836.50p 0.93%
Spirax-Sarco Engineering (SPX) 11,785.00p 0.86%
Kingfisher (KGF) 275.10p 0.84%
SEGRO (SGRO) 967.40p 0.79%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 152.15p -3.06%
BP (BP.) 286.80p -2.23%
NATWEST GROUP PLC ORD 100P (NWG) 153.80p -2.23%
Prudential (PRU) 1,400.00p -1.82%
Whitbread (WTB) 3,129.00p -1.63%
Anglo American (AAL) 2,626.00p -1.57%
Compass Group (CPG) 1,388.50p -1.52%
M&G (MNG) 194.50p -1.52%
Royal Dutch Shell 'A' (RDSA) 1,415.80p -1.46%
Rolls-Royce Holdings (RR.) 101.80p -1.45%

FTSE 250 - Risers

Kainos Group (KNOS) 1,280.00p 12.68%
Computacenter (CCC) 2,530.00p 3.10%
Brewin Dolphin Holdings (BRW) 299.50p 2.92%
Caledonia Investments (CLDN) 2,885.00p 2.67%
TBC Bank Group (TBCG) 1,310.00p 2.50%
Morgan Advanced Materials (MGAM) 318.50p 2.41%
BMO Global Smaller Companies (BGSC) 147.60p 2.36%
PZ Cussons (PZC) 239.00p 2.36%
John Laing Group (JLG) 333.40p 2.21%
Marshalls (MSLH) 696.00p 2.13%

FTSE 250 - Fallers

TUI AG Reg Shs (DI) (TUI) 376.80p -10.84%
Premier Foods (PFD) 95.10p -4.23%
Vivo Energy (VVO) 77.50p -3.49%
Vectura Group (VEC) 121.40p -3.34%
SSP Group (SSPG) 331.00p -3.27%
easyJet (EZJ) 783.20p -2.97%
Investec (INVP) 190.95p -2.92%
Mediclinic International (MDC) 291.80p -2.67%
Cineworld Group (CINE) 67.56p -2.62%
Lancashire Holdings Limited (LRE) 714.50p -2.39%

Disclaimer & Declaration of Interest

The information, investment views and recommendations in this article are provided for general information purposes only. Nothing in this article should be construed as a solicitation to buy or sell any financial product relating to any companies under discussion or to engage in or refrain from doing so or engaging in any other transaction. Any opinions or comments are made to the best of the knowledge and belief of the writer but no responsibility is accepted for actions based on such opinions or comments. Vox Markets may receive payment from companies mentioned for enhanced profiling or publication presence. The writer may or may not hold investments in the companies under discussion.

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