London open: Stocks nudge lower as retail sales disappoint

Opening Market Report
07:08, 19th February 2021

(Sharecast News) - London stocks nudged lower in early trade on Friday as investors mulled disappointing retail sales data, and full-year results from NatWest.
At 0840 GMT, the FTSE 100 was down 0.2% at 6,607.24, while sterling was 0.1% firmer against the dollar at 1.3983.

Figures released earlier by the Office for National Statistics showed UK retail sales slumped in January as tighter nationwide coronavirus restrictions hammered department and clothing stores.

Sales volumes fell 8.2% compared with December, the biggest fall since April, and far more than the 2.5% forecast by economists. The ONS said the figures reflected the impact of the third national lockdown imposed at the start of the month. Sales were down 5.5% year on year.

ING economist James Smith said: "Assuming the spring reopening proves sustainable, and the vaccines succeed in keeping transmission and hospitalisations contained, then consumer spending is likely to rise strongly from spring onwards. However we think it's more likely to favour services for obvious reasons, and it's therefore likely that retailers won't feel the full benefit (though clothing may be a possible exception)

"The abrupt switch to online retail during the pandemic is also unlikely to fully reset, having only accelerated a trend that was already there. It's therefore likely that we'll see further signs of consolidation on the high street this year, and that may unfortunately contribute to a rise in unemployment in the sector."

Separate figures from the ONS showed the UK government borrowed another £8.8bn in January, less than the £24.5bn forecast by economists.

Borrowing since the start of the financial year in April now stands at £270.6bn, reflecting the surge in spending and tax cuts introduced by Finance Minister Rishi Sunak to counter the impact of the Covid-19 pandemic.

Britain's national debt has now hit £2.1trn, and the ONS said debt as a percentage of GDP was at its highest since the 1960s, currently at 97.9%. The government is on track to borrow £400bn by the end of the current financial year in April.

Investors will also be looking out for the release of Markit's services and manufacturing PMIs for February at 0930 GMT.

In equity markets, NatWest was in the red after the bank said it was pulling out of the Republic of Ireland, reported a smaller-than-expected annual loss and restored its dividend

The lender swung to a £351m operating pre-tax loss for the year to the end of December from a £4.2bn profit a year earlier as income fell and it set aside more for bad debts during the pandemic. Analysts had on average expected a £418m annual loss.

NatWest, formerly known as Royal Bank of Scotland, said it would pay a final dividend of 3p a share, restoring the payout after the Bank of England blocked banks from paying dividends early in the Covid-19 crisis.

TBC Bank fell after the Georgian lender said fourth-quarter profit declined 38% as its bad debt charge surged during the pandemic.

On the upside, Future shares surged after the media company said full-year profitability was set to be "materially ahead" of current market expectations after a positive start to the year.

Real estate investment trust Segro was also trading up after it posted a 10.8% jump in adjusted full-year pre-tax profit.

Market Movers

FTSE 100 (UKX) 6,607.24 -0.15%
FTSE 250 (MCX) 20,947.31 0.06%
techMARK (TASX) 4,072.87 0.05%

FTSE 100 - Risers

Smith & Nephew (SN.) 1,513.50p 2.61%
InterContinental Hotels Group (IHG) 5,090.00p 2.11%
Evraz (EVR) 542.60p 1.99%
Auto Trader Group (AUTO) 614.00p 1.69%
Glencore (GLEN) 293.15p 1.66%
Rolls-Royce Holdings (RR.) 94.72p 1.48%
Antofagasta (ANTO) 1,739.50p 1.43%
SEGRO (SGRO) 974.20p 1.18%
M&G (MNG) 187.30p 1.13%
Hargreaves Lansdown (HL.) 1,540.50p 0.85%

FTSE 100 - Fallers

NATWEST GROUP PLC ORD 100P (NWG) 168.25p -1.78%
BP (BP.) 265.70p -1.37%
Royal Dutch Shell 'A' (RDSA) 1,371.80p -1.35%
Berkeley Group Holdings (The) (BKG) 4,287.00p -1.29%
Barclays (BARC) 145.80p -1.15%
Royal Dutch Shell 'B' (RDSB) 1,316.00p -1.14%
Lloyds Banking Group (LLOY) 37.06p -1.13%
B&M European Value Retail S.A. (DI) (BME) 578.00p -1.03%
Standard Chartered (STAN) 484.20p -1.00%
AstraZeneca (AZN) 7,381.00p -0.98%

FTSE 250 - Risers

Future (FUTR) 2,070.00p 8.83%
BlackRock Smaller Companies Trust (BRSC) 1,716.00p 1.90%
PZ Cussons (PZC) 259.50p 1.76%
Polar Capital Technology Trust (PCT) 2,365.00p 1.72%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,030.00p 1.70%
Derwent London (DLN) 3,162.00p 1.48%
HICL Infrastructure (HICL) 170.80p 1.43%
BMO Commercial Property Trust Limited (BCPT) 71.20p 1.42%
Gamesys Group (GYS) 1,348.00p 1.35%
Capital & Counties Properties (CAPC) 166.90p 1.34%

FTSE 250 - Fallers

Hochschild Mining (HOC) 205.40p -3.66%
Indivior (INDV) 134.30p -3.59%
Energean (ENOG) 872.20p -3.49%
Wood Group (John) (WG.) 285.80p -2.69%
Oxford Biomedica (OXB) 979.00p -2.49%
PureTech Health (PRTC) 400.00p -2.20%
Babcock International Group (BAB) 223.70p -2.01%
Sirius Real Estate Ltd. (SRE) 91.50p -1.93%
Cairn Energy (CNE) 182.50p -1.83%
Vivo Energy (VVO) 88.10p -1.67%

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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