Leading UK shares fell in early trading on Friday despite a surge in March retail sales as a stronger pound weighed on export-oriented companies.
The benchmark FTSE 100 lost 0.26% in early deals at 6,919.95 with large dollar-earning exporters like consumer staples companies Unilever (ULVR), Diageo (DGE) and British American Tobacco (BATS) slipping by up to 1% as the pound strengthened against the dollar to $1.3886.
Heavyweight oil majors BP (BP) and Royal Dutch Shell (RDSB) also fell and were among the biggest drags to the index.
UK government borrowing for the financial year to March 2021 is estimated to be £303.1 billion, according to the latest data from the Office for National Statistics. That equates to 14.5% of GDP and it would be the highest figure since the second world war.
PRE-REOPENING RETAIL BOOM
Strong retail sales numbers for March took everyone by surprise, jumping 5.4% after the 2.2% surge in February. Economists polled by Reuters had expected a much smaller month-on-month increase of 1.5%. The spending spree came before the end of lockdown and the reopening of non-essential shops helped by survey data showing a 13-month high for consumer confidence as the economy reopened partially.
But retail optimism did little for the more domestically-focused FTSE 250, which lost 0.33% early on Friday to 22,306.22, coming off recent 22,500-plus records.
The wheels came off the equity bandwagon yesterday in the US after it was reported that the Biden administration is looking to increase the rate of capital gains tax to 39.6% for those Americans earning $1 million or more per year.
The Dow Jones industrial average tumbled 321 points to 33,816 while the S&P 500 shed 38 points at 4,135. The tech-heavy Nasdaq Composite matched these rough 1% declines, down 131.8 points to close at 13,818.41 overnight.
FIRSTGROUP EXITS US
UK transport operator FirstGroup (FGP) has agreed to sell its US school bus business for $4.6 billion, including debt, to Swedish private equity firm EQT Infrastructure.
The company’s plans to focus on its bus and rail operations in the UK were wildly welcomed by investors who sent the stock soaring, jumping nearly 20% early on before gains eased to around 10% at 94.22p. The funds will be used to pay down debt.
Property firm Workspace (WKP) shed 6% to 783.5p after announcing that non-executive director Maria Moloney will step down from the board after nine years. Her departure from the real estate investment trust will be effective from the date of the annual general meeting on 22 July.
Fulham Shore (FUL:AIM) advanced 5% to 16.74p after announcing that 70 of its 72 Franco Manca and The Real Greek restaurants were open for business. Group sales in the week ended Sunday April 18 were described as ‘very encouraging’ after showing performance up on the previous week and also better than in the same week in 2019.
AROUND THE MARKETS WRAP
Oil and gas exploration company Baron Oil (BOIL:AIM) jumped 11% to 0.11p after it said it had completed its earn-in for an increased stake in the Chuditch discovery and prospects.
Baron increased its shareholding in SundaGas from 33.33% to 85%, and thereby increased its indirect stake in the TL-SO-19-16 PSC, the Chuditch project, offshore Democratic Republic of Timor-Leste from 25% to 63.75%.
Podcasts firm Audioboom (BOOM:AIM) jumped nearly 7% to 703.5p after the company said it expected annual revenue to ‘significantly’ top market expectations as strong sales momentum continued.
Real Estate company LondonMetric Property (LMP) fell 0.5% 226.60p after it sold two assets let to M&S and Wickes in Derby for a combined consideration of £11.1 million at a blended NIY of 6.0% and a 7% surplus to the last reported book value.
Warren Buffett-styled investment trust Fidelity Special Values (FSV) slipped 0.3% to 281.75p after reporting a rise in total returns that was ‘significantly’ ahead of its benchmark in the first half of the year thanks to a jump in value stocks.
For six month period to 28 February 2021, net asset value total return of 24.3% and a share price total return of 36.5%, compared to a total return of 12.0% for the FTSE All-Share Index, the company's benchmark index.
Commercial property investment firm UK Commercial Property REIT (UKCM) 0.7% to 75.6p after reporting a net loss for the year of £10.3 million - a consequence of the Covid-19 pandemic.
