Stocks in London failed to take inspiration from a rally on Wall Street overnight, drifting lower early Friday with investors mulling data which showed UK consumer confidence has taken a hit as the cost of living crisis bites.
GfK's UK consumer confidence index fell by 5 points to minus 31 in March as consumers confront a ‘wall of worry’ amid 30-year-high levels of inflation.
‘Confidence in our personal financial situation and in the wider economy are severely depressed while the daily news of unimaginable suffering from a horrifying war in Europe and rising Covid numbers at home is adding to the bleak mood. The outlook for consumer confidence is not good; it's certain there's more bad news to come,’ Joe Staton, client strategy director at data analytics firm GfK.
The FTSE 100 index was down 18.94 points, or 0.3%, at 7,448.44 early Friday. The mid-cap FTSE 250 index inched up 15.49 points, or 0.1%, to 20,908.68. The AIM All-Share index was up just 0.39 of a point at 1,036.75.
The Cboe UK 100 index was down 0.5% at 740.54. The Cboe 250 was flat at 18,464.20, and the Cboe Small Companies also flat at 15,044.32.
In mainland Europe, the CAC 40 in Paris and DAX 40 in Frankfurt were 0.1% lower.
Conversely, equities in New York climbed on Thursday. The Dow Jones Industrial Average ended up 1.0%, the S&P 500 up 1.4% and the Nasdaq Composite up 1.9%.
‘There is a war in Ukraine, an energy crisis, slowing growth in China and the Federal Reserve is bent on stamping out inflation - yet the S&P is less than 6% below its all-time high and has added almost 9% in the past couple of weeks.’ SPI Asset Management analyst Stephen Innes commented.
In Asia on Friday, the Japanese Nikkei 225 index rose 0.1%. In China, the Shanghai Composite closed down 1.2%, while the Hang Seng index in Hong Kong ended down 2.5%. In Sydney, the S&P/ASX 200 closed up 0.3%.
The pound weakened to $1.3176 early Friday in London, from $1.3194 at the London equities close on Thursday.
According to the Office for National Statistics, UK retail sales declined 0.3% month-on-month in February, following a 1.9% hike in January from December. The figure for February was below FXStreet cited consensus of a 0.6% rise.
Annually, retail sales rose 7.0% in February, slowing from growth of 9.4% in January. FXStreet-cited consensus had forecast a 7.8% yearly rise for February.
Daiwa analyst Chris Scicluna commented: ‘That left them 3.7% above the pre-pandemic level in February 2020. But as it has been since last spring, the underlying trend remains down.
‘Looking ahead, the downtrend in sales volumes looks set to continue. With inflation still intensifying, real incomes are set to fall this year by the most since the 1950s if not earlier.’
The figures from the ONS on Friday compounded worries after the long-running GfK tracker showed UK consumer confidence fell in March.
But shaking off worries over squeezed disposable incomes, DIY retailer Wickes added 7.5% in early trade.
It posted double-digit revenue growth, with the DIY retailer benefitting from increased demand driven by the Covid-19 pandemic.
Revenue in the financial year that ended January 1 jumped 14% to £1.53 billion from £1.35 billion. Pretax profit surged to £65.4 million from £28.9 million.
Wickes, separated from Travis Perkins back in April of last year, paid an annual dividend of 10.9 per share.
‘Favourable consumer trends’ and an ‘ageing housing stock’ mean the company is set for a decent 2022, Chief Executive David Wood said.
Kingfisher, which posted similarly positive annual figures of its own this week, added 1.1% in a positive read-across. The FTSE 100 constituent owns B&Q and ScrewFix in the UK.
Go-Ahead rose 3.2%. The transport company said the UK Department for Transport has handed rail contracts to its Govia Thameslink Railway unit. It will mean GTR continues to operate the Thameslink, Southern and Great Northern rail services, the largest railway network in the UK.
Go-Ahead has a 65% stake in Govia.
The pact begins at the start of April and runs for the three years. There is also an option for a further three years, should government agree.
GTR will earn a fixed yearly management fee of £8.8 million, with an additional performance fee of up to £22.9 million.
‘Subject to the achievement of performance targets set by the DfT, the maximum fee receivable by GTR would therefore be £31.7 million per annum.’ Go-Ahead added.
Petropavlovsk was a notable faller, meanwhile, plunging 18%, taking the gold miner's market value below the £60 million mark.
Petropavlovsk warned it has a $200 million term loan and a $86.7 million revolving credit facility with Gazprombank, a bank which now has been sanctioned by the UK, in the wake of Russia's invasion of Ukraine.
‘It is a condition of these facilities and the term loan that Gazprombank acts as an off-taker of 100% of the group's gold production,’ the Petropavlovsk explained.
Sanctions and asset freezes imposed on Gazprombank currently prevent Petropavlovsk from making further sales of gold to Gazprombank.
‘Restrictions on purchasing and selling gold in Russia may make it challenging to find an alternative purchaser for the group's gold output,’ Petropavlovsk warned.
‘The company is urgently considering with its advisers the implications for the group's activities and financing arrangements resulting from GPB being designated for the purposes of an asset freeze. A further announcement will be made in due course. Petropavlovsk reconfirms that none of the companies in the group has to date been named in the sanctions against Russia announced by the United Kingdom, United States, European Union, and other nations.’
The gold miner was a FTSE 250 constituent until not too long ago.
Index operator FTSE Russell last week Monday said Petropavlovsk was among a number of Russia-linked stocks deposed from FTSE Russell indices.
Petropavlovsk had already been due to drop out of the FTSE 250 index, following an index review which came into effect earlier this week.
Its shares have slumped roughly 90% since mid-February.
On AIM, meanwhile, gold development company Goldstone Resources jumped 21%. The operator of the Homase gold mine in Ghana reported decent progress from the asset since it came into production earlier this year.
In the year to date, Homase has produced and sold 1,717 troy ounces of gold, at an average realised price of $1,907 per ounce.
For 2022, it targets output of 20,000 ounces.
The euro traded at $1.1015 early Friday London time, up from $1.1002 late Thursday. Against the yen, the dollar was quoted at JP¥121.62, down from JP¥122.16.
‘USDJPY has made quite a dramatic move lower today. The sell-off persisted into the Tokyo open for the first time in weeks,’ SPI's Innes added.
Gold was quoted at $1,959.10 an ounce early Friday in London, down from $1,964.88 late Thursday. Brent oil was trading at $116.50 a barrel, down from $118.85.
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