Disappointing UK retail sales figures for last month and growing investor resignation to interest rate hikes next month combined to push down share prices early on Friday.
The FTSE 100 index opened down 9.82 points, or 0.1%, at 7,892.79, entirely wiping out the small gain made on Thursday.
The FTSE 250 was down 39.33 points, or 0.2%, at 19,096.54, and the AIM All-Share was down 1.63 points, or 0.2%, at 827.60.
The Cboe UK 100 was down 0.1% at 789.26, the Cboe UK 250 was down 0.2% at 16,726.89, and the Cboe Small Companies was down 0.1% at 13,767.33.
UK retail sales declined by more than expected in March, according to the Office for National Statistics.
Retail sales volume is estimated to have fallen 0.9% in March from the month before, following a 1.1% rise in February. February’s monthly rise was revised down from an increase of 1.2%, the ONS said.
Markets expected retail sales volume to fall 0.5% in March on a monthly basis, according to FXStreet-cited consensus.
Garbriella Dickens, senior UK economist at Pantheon Macroeconomics, said the renewed decline in retail sales in March ‘proves’ the recovery in January and February was a ‘false dawn’ and suggests that consumers still are grappling with very high inflation and mortgage rates.
Against the same month a year prior, retail sales volume fell 3.1% in March, slowing from a fall of 3.5% in February. The annual print was in-line with market expectations.
The pound was quoted at $1.2400 at early on Friday in London, half a cent lower compared to $1.2449 at the close on Thursday.
In London, mining stocks were amongst the worst blue-chip performers in early morning trade as commodity prices declined amid a worries around the global demand outlook.
Brent oil was quoted at $80.42 a barrel early in London on Friday, down from $81.29 late Thursday. Gold was quoted at $1,985.20 an ounce, significantly lower against $2,002.90.
Rio Tinto fell 4.0%, Anglo American 2.8%, Antofagasta 2.2%, and Endeavour Mining 1.8%.
Glencore lost 1.7%. The miner and commodities trader said production in the first quarter of 2023 was ‘broadly’ in-line with its expectations, accounting for portfolio changes and operational conditions, including the disposals and closures of some zinc and lead mines in the Americas during 2022.
Own-sourced copper production was 244,100 tones, down 5% on the previous year due to planned lower grades and delays associated with adverse weather, Glencore said.
Own-source zinc production totalled 205,300 tonnes, down 15% on the previous year, reflecting the disposal of the company’s South American zinc operations and the closure of the Matagami mine.
Glencore left its full-year production guidance unchanged nonetheless.
In the FTSE 250, Network International surged 11% as confirmed it has received an 400 pence per share takeover offer for the company from Brookfield Asset Management.
The Brookfield offer follows another potential offer for the payments provider from CVC Advisers and Francisco Partners Management at a price of 387p per share.
Network said it is currently evaluating the Brookfield offer with its financial advisers and said a further statement will be made in due course.
The stock closed at 360.00p on Thursday.
Elsewhere in London, Sureserve rocketed 37%, after it said it reached an agreement with Cap10 4NetZero Bidco, a company indirectly owned by Cap10 Partners, on an all-cash takeover for the energy services provider.
Cap10 will pay 125p for each Sureserve share, a 39% premium to its closing price of 90p on Thursday. The company said this values it at around £214.1 million.
The Sureserve board said it considers the terms of the acquisition to be ‘fair and reasonable’ and intends to unanimously recommend the acquisition at a general meeting, expected to be held in June.
Chair Nick Winks said: ‘Under Bidco’s private ownership, without the costs and regulation of a listed company, Sureserve should be able to pursue its strategy more productively and thereby sooner achieve leadership in helping our customers transition from traditional heating fuels to renewable alternatives.’
In the US on Thursday, Wall Street ended lower, with the Dow Jones Industrial Average down 0.3%, the S&P 500 down 0.6% and the Nasdaq Composite down 0.8%.
US stocks slipped as concerns over the health of the US economy and disappointing earnings from the likes of Tesla and AT&T weighed on equities.
Expectations that US interest rates will remain higher for longer also weighed on sentiment.
A top Federal Reserve official said US interest rates are likely to rise further and will need to remain high to effectively tackle inflation on Thursday.
‘Some additional tightening may be needed to ensure policy is restrictive enough’ to support the Fed’s dual mandate of keeping both unemployment and inflation low, Philadelphia Fed President Patrick Harker said in a speech in Pennsylvania, according to prepared remarks.
‘Once we reach that point, which should happen this year, I expect that we will hold rates in place and let monetary policy do its work,’ he said.
Harker’s call to continue tightening monetary policy echoed similar comments made in recent weeks by other members of the policy-setting Federal Open Market Committee, including New York Fed President John Williams and Fed Governor Christopher Waller.
The European Central Bank made similar hawkish noises. On Wednesday, ECB Chief Economist Philip Lane said that ‘it will be appropriate to raise rates further’ if the ‘baseline scenario’ underlying the ECB’s most recent forecasts in March holds.
Minutes from the ECB’s most recent meeting, released on Thursday, also signalled there is still more monetary policy tightening on the way in May.
‘The persistence of inflation continues to confound economists and policy makers, as the significant supply shocks that sparked this wave have now largely faded,’ commented Rabobank.
‘Therefore, it was not surprising that the accounts of the last ECB meeting...revealed an increasing divergence of views on the inflation outlook. While there is general agreement on the root cause of inflation, it is still hotly debated why inflation proves so persistent.’
In European equities early Friday, the CAC 40 in Paris was up 0.1%, while the DAX 40 in Frankfurt was flat. The euro stood at $1.0946, lower against $1.0971.
In Tokyo on Friday, the Nikkei 225 index closed down 0.3.
Japan’s consumer prices rose 3.1% in March on a year before, matching February’s figure and roughly in line with expectations, as inflation slows from four-decade highs, government data showed.
The figure, which excludes volatile fresh food prices, was marginally higher than market expectations of a 3.0% rise and even with February numbers.
Friday’s figure comes a week before the Bank of Japan’s first policy decision under its new governor, Kazuo Ueda, who has said the central bank’s longstanding loose monetary policy is ‘appropriate’.
The 3.1% figure is above the two-percent target, which has been surpassed every month since April last year.
Against the yen, the dollar was trading at JP¥133.96, lower compared to JP¥134.04.
In China, the Shanghai Composite closed down 2.0%, while the Hang Seng index in Hong Kong closed down 1.8%.
The S&P/ASX 200 in Sydney closed down 0.4%.
Still to come on Friday’s economic calendar, there are slew of flash purchasing managers’ index readings, including the eurozone at 0900 BST, the UK at 0930 BST and the US at 1445 BST.
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