Stock prices in London, Paris and Frankfurt were higher on Friday morning despite underperforming UK retail sales, with miners boosting the FTSE 100 on the back of economic growth data from China.
UK retail sales volumes decreased 0.3% month-on-month in December, worsening from 0.1% growth in November and falling far short of the FXStreet-cited market consensus of 0.4% growth.
On an annual basis, retail sales grew 3.6% in December. This missed the FXStreet consensus of 4.2%, but represented an acceleration no change in the year to November. Notably, November’s figure was downwardly revised from a previously reported 0.5% increase.
‘Retailers found coal in their stockings this December...Despite the festive season, consumers tightened their belts, with ongoing financial pressures and caution around the cost of living weighing heavily on spending,’ commented Ebury’s Phil Monkhouse.
‘Looking ahead, with the Bank of England holding rates at a frosty 4.75% and fresh concerns around the UK’s growth outlook, there could still be room for downside in consumer confidence.
‘The global and domestic landscape also offers little reassurance, with recent UK market volatility and potential policy shifts under the new US administration increasing the risks of supply chain disruptions.’
The FTSE 100 index opened up 80.40 points, 1.0%, at 8,472.30.
AFP reported at 0845 GMT that the index had reached a record high.
The FTSE 250 was up 84.49 points, 0.4%, at 20,611.19, and the AIM All-Share was up 1.81 points, 0.3%, at 719.12.
The Cboe UK 100 was up 1.0% at 849.11, the Cboe UK 250 was up 0.7% at 17,992.19, and the Cboe Small Companies was up 0.9% at 15,537.82.
Miners were among the FTSE 100 leaders, off the back of economic growth data from China which, while mixed, gave rise to cautious analyst optimism (see below).
Among these were Antofagasta, up 2.9%; Anglo American, up 2.1%; and Glencore, up 1.8%.
On the FTSE 250, Ninety One jumped 6.1%.
The London and Cape Town-based money manager said its assets under management rose 2.2% to £130.2 billion for the third quarter to December 31, from £127.4 billion for the second quarter.
On an annual basis, AuM was up 4.8% from the same period in 2023.
Among smaller caps, DFS Furniture lost 2.9%.
In a trading update it said that it expects pretax profit between about £16 million and £17 million for the six months to December 29, at least £7 million higher than the prior year.
Order intake increased on-year but this was ‘notwithstanding a weak market backdrop’.
DFS also expects costs to rise next year due to increased national insurance contributions and a rise in the minimum wage. It said it has a ‘cautious view on market demand’ for the second half of the year, based on the UK’s post-budget economic performance.
Meanwhile, IG Design plummeted 57%.
The designer and manufacturer of celebration products said ‘challenging market conditions and retail trends’ continued into its second half year, and have ‘more than offset’ the benefits of its cost-saving initiatives.
Consequently, it expects full-year revenue to be around 10% lower on-year and to miss expectations, while adjusted profit will be ‘significantly impacted, with profit delivery for the full year around break-even, and well below last year, as well as being significantly below current market expectations’.
In European equities on Friday, the CAC 40 in Paris was up 0.7%, while the DAX 40 in Frankfurt was up 0.4%.
The pound was quoted lower at $1.2190 early on Friday in London, compared to $1.2241 at the equities close on Thursday. The euro stood lower at $1.0296, against $1.0305. Against the yen, the dollar was trading higher at JP¥155.60 compared to JP¥155.19.
In Asia on Friday, the Nikkei 225 index in Tokyo was down 0.3%. In China, the Shanghai Composite was up 0.2%, while the Hang Seng index in Hong Kong was up 0.3%. The S&P/ASX 200 in Sydney closed down 0.2%.
China’s economy grew 5% last year, official data from Beijing’s National Bureau of Statistics showed, slightly above an 4.9% forecast but lower than 5.2% in 2023. The fourth quarter however saw a 5.4% GDP rise, outperforming Bloomberg’s 5% forecast.
Retail sales, a key gauge of consumer sentiment, rose 3.5% – a major slump from the 7.2% growth seen in 2023 – though industrial output increased 5.8%, from 4.6% the previous year.
‘Against the odds, the Chinese economy improved in the final stretch of the year and managed to hit the 5% target in inflation-adjusted terms,’ said Swissquote’s Ipek Ozkardeskaya. ‘But the country has been in deflation for the second straight year, and retail sales expanded just 3.5% versus a 5.8% advance in industrial production.
‘Industrial production is easier to boost with stimulus measures than consumption, but consumption is the end goal for healthy growth – and China is not there just yet.’
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.2%, the S&P 500 down 0.2% and the Nasdaq Composite down 0.9%.
‘Optimism yesterday could’ve been boosted by slower-than-expected US retail sales in December, another set of strong bank and TSM earnings and hawkish comments from the Federal Reserve’s Christopher Waller who said that he sees multiple rate cuts in 2025 and a rate cut sooner than the market is pricing,’ commented Ozkardeskaya. ‘But a quick glance at the inflation metrics in the US confirms the worries that the US inflation is trending lower at a relatively slow speed. The energy and goods inflation is under control, but the core services inflation remains pretty sticky.’
Brent oil was quoted higher at $80.93 a barrel early in London on Friday from $79.90 late Thursday.
Ozkardeskaya noted that ‘Donald Trump’s tariff threats and plans to jolt the energy space with further sanctions against oil-producing countries like Iran, Russia and Venezuela, threaten to maintain the upside pressure in oil prices this year....US crude eased yesterday as hitting the $80pb psychological mark encouraged many traders to realize profit, but crude is better bid this morning on good news from China, this time, and closing the week above the $80pb level could give investors another incentive to stick with their bullish bets – especially if China optimists join the party.’
Gold was quoted lower at $2,710.77 an ounce against $2,719.78.
Still to come on Friday’s economic calendar is the eurozone’s consumer price inflation print, with US industrial production to follow later.
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