The FTSE 100 was oscillating between green and red on Thursday, with a weaker pound providing some support to the overseas earnings-heavy index but the mood weighed down by a gloomy UK consumer confidence reading.
The FTSE 100 was down 8.43 points, or 0.1%, at 7,533.42. The FTSE 250 index was down 116.24 points, or 0.6%, at 20,020.41. The AIM All-Share index was down 3.52 points, or 0.4%, at 921.04.
The Cboe UK 100 index was down 0.1% at 752.79. The Cboe 250 was down 0.7% at 17,301.67. The Cboe Small Companies was down 0.1% at 14,337.79.
In Paris, the CAC 40 was down 0.8%, while the DAX 40 in Frankfurt was down 0.7%.
Stocks in New York were called lower on Friday. The Dow Jones Industrial Average was called down 0.6%, the S&P 500 was called 0.8% lower and the Nasdaq Composite down 0.9%.
Sterling quoted at $1.1852 midday Friday, roughly a one-month low, plummeting from $1.2000 at the London equities close on Thursday.
‘The consumer backdrop feels increasingly gloomy and that’s bad news because consumer spending is such an important contributor to the UK economy,’ AJ Bell analyst Danni Hewson commented.
‘That’s reflected in weakness in the pound, which is actually good news for a globally-orientated FTSE 100 as it flatters the relative value of overseas earnings.’
UK retail sales defied expectations and grew on a monthly basis in July, figures on Friday showed, though they slightly missed a year-on-year forecast. On a monthly basis, sales increased 0.3% in July from June, outperforming expectations of a 0.2% decline. They had fallen 0.2% on a monthly basis in June.
UK retail sales volumes fell 3.4% on a yearly basis in July, a sharper than the FXStreet-cited market consensus of a 3.3% slide, however. In June, they had slumped 6.1% year-on-year.
Ahead of the data, a long-running UK consumer confidence tracker hit a record low.
GfK’s consumer confidence index fell three points in August to minus 44, its lowest figure since records began in 1974.
Shares in London-listed retailers fell on Friday, in the wake of the poor consumer confidence reading and tricky outlook for the sector.
DIY retailer Kingfisher lost 2.3%, while high street outfits Next and JD Sports lost 1.3% and 1.4% respectively.
On AIM, Joules tumbled 36%. Scorching hot weather has hit sales of winter clothing, including ‘rainwear, knitwear, and wellies’. Trading over the five weeks to August 14 has ‘softened materially,’ it cautioned.
Margins have taken a hit and Joules now expects a ‘significant loss’ in its first half. It expects an improved second half, as it reaps the rewards of self-help work.
The euro stood at $1.0057 midday Friday in London, down from $1.0132 late Thursday. Roughly a month ago, the dollar hit parity with the single currency. Against the yen, the dollar was trading at JP¥136.74, up sharply from JP¥135.10.
‘The US dollar and Treasury yields were supported by Fed policymakers’ comments. St Louis Fed President [James] Bullard said he is leaning towards another 75 basis point increase in interest rates at next month’s policy meeting while he also attempted to douse speculation of rate cuts next year,’ analysts at Lloyds Bank commented.
Markets are also looking towards next week’s Jackson Hole Economic Symposium in Wyoming, US.
Analysts at Swiss bank UBS expect the tone from monetary policymakers to be hawkish at next week’s meet.
‘We anticipate a rather hawkish tone from key policymakers as they reiterate the fight against inflation is not yet over. But it’s also an opportunity for Fed Chair Jerome Powell to provide more guidance on the rate path going forward, given renewed data dependency and the perception of a policy pivot. It should be noted that past Jackson Hole events have sometimes delivered surprising statements from the Fed and other central banks,’ UBS added.
Back in London, Just Eat Takeaway.com jumped 39%. It has relinquished a 33% stake in the iFood joint-venture to Johannesburg- and Amsterdam-listed internet assets investor Prosus for up to €1.8 billion.
‘Just Eat Takeaway.com remains focused on improving its profitability and on a disciplined allocation of capital. It will retain the transaction proceeds to maintain its balance sheet strength and to service repayments of its upcoming debt maturities,’ Just Eat said.
iFood has online food and delivery operations in Latin America. Prosus and its subsidiary Movile will fully own iFood after the deal is completed. Prosus was up 0.6% in Amsterdam.
The deal comes as Just Eat Takeaway explores a deal for its Grubhub unit. Just Eat completed its $7.3 billion acquisition of Chicago, US-headquartered Grubhub in June last year. It first mulled a sale of Grubhub in April, and on Friday said it continues to ‘actively explore’ this.
Kingspan shares surged 6.6%, after the building materials firm said it has ‘been able to navigate’ input cost inflation.
For the six months that ended on June 30, revenue rose 42% to €4.15 billion from €2.92 billion a year earlier. It has the first time half-year revenue topped €4 billion.
Pretax profit surged 30% to €387.6 million from €297.2 million.
‘Despite a challenging trading environment, Kingspan delivered record half year results, with revenues over €4 billion for the first time. We have been able to navigate large input cost increases with only modest margin impact,’ Chief Executive Gene Murtagh commented.
Kingspan upped its payout by 29% to 25.6 cents from 19.9 cents.
Helping to ensure the FTSE 100 outperformed continental peers, consumer goods firms Unilever and Reckitt rose 1.0% and 1.3%.
Pharmaceutical firms were also on the up, AstraZeneca was the best blue-chip performer, up 1.4%, while GSK added 0.9%. GSK shares have slid 2.4% this week, however, having slumped 13% the week before due to worries over possible Zantac litigation.
GSK on Tuesday said a first scheduled trial in its Zantac case was voluntarily dismissed. The pharma firm noted it did not pay anything in exchange for the voluntary dismissal.
The heartburn drug was withdrawn after the US Food & Drug Administration in 2019 warned that the product contained levels of NDMA, a probable human carcinogen - a substance which has been linked to cancer.
Travel stocks were grounded amid consumer confidence fears. British Airways parent International Consolidated Airlines Group fell 2.6%, budget carrier easyJet lost 4.3% and tour operator On the Beach shed 3.8%.
Brent oil was quoted at $94.65 a barrel midday Friday, down from $96.12 late Thursday. Gold was quoted at $1,750.17 an ounce, down from $1,761.70.
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