London midday: Stocks fall further as sterling gains; retail sales in focus

(Sharecast News) - London stocks had extended losses by midday on Friday amid a firmer pound, as investors mulled the latest UK retail sales data.

The FTSE 100 was down 0.4% at 8,310.99, while sterling was up 0.4% against the dollar at 1.2903.

A stronger pound tends to dent the top-flight index as around 70% of its constituents derive their earnings from overseas.

Figures released earlier by the Office for National Statistics showed that retail sales bounced back in July, albeit a touch less than expected.

Sales volumes rose 0.5% on the month in July following a 0.9% decline in June, when they were hit by bad weather and uncertainty over the general election. Economists were expecting a 0.6% increase.

June's fall was revised from an initial estimate of a 1.2% decline.

The data showed that sales volumes were up 1.4% versus July 2023. Compared with their pre-Covid level in February 2020, sales were down 0.8%.

ONS director of economic statistics Liz McKeown said: "Retail sales grew in July led by increases in department stores and sports equipment shops, with both the Euros and discounting across many stores boosting sales.

"These increases were offset by a poor month for clothing and furniture shops, and falling fuel sales, despite prices at the pump falling."

Russ Mould, investment director at AJ Bell, said: "The market's short, sharp shock at the start of August is starting to feel like a distant memory as global indices claw back their losses and the VIX volatility index falls back to the sort of levels it has seen for much of the last year or so,

"Yesterday's stronger-than-expected US retail sales and bumper earnings from Walmart helped to alleviate fears the US economy could be about to tip into recession.

"However, a move higher in the pound after some relatively upbeat data on the UK economy contributed to a slight fall in London's flagship FTSE 100 index on Friday morning as strength in sterling hits the relative value of its constituents' dominant overseas earnings.

"There was also some weakness in the property sector, with investors potentially guessing the more positive UK economic picture will reduce the impetus for further interest rate cuts from the Bank of England.

"UK retail sales bounced back strongly in July as the impact of Euro 2024 and the Olympics boosted sports shops and the weather improved, but the number was a bit below expectations and in areas like clothing and furniture demand was disappointing."

In equity markets, Ladbrokes owner Entain gained after an upgrade to 'neutral' from 'sell' at Goldman Sachs.

Pharma giant GSK nudged lower even as it it welcomed a ruling by the Florida State Court excluding expert testimony in the long-running Zantac lawsuit where the plaintiffs allege the heartburn drug caused cancer.

GSK said it would now seek dismissal of the upcoming Wilson case in Florida - whereby the plaintiffs "alleged a causal link between ranitidine and prostate cancer".

AstraZeneca was also in focus as it announced that 'Imfinzi', or durvalumab, has been approved by the US FDA for treating resectable early-stage non-small cell lung cancer in adults without certain genetic mutations.

Market Movers

FTSE 100 (UKX) 8,310.99 -0.44% FTSE 250 (MCX) 21,071.27 -0.11% techMARK (TASX) 4,909.24 -0.33%

FTSE 100 - Risers

Entain (ENT) 634.80p 2.32% Melrose Industries (MRO) 506.00p 1.50% CRH (CDI) (CRH) 6,620.00p 1.50% Pershing Square Holdings Ltd NPV (PSH) 3,682.00p 1.32% Admiral Group (ADM) 3,022.00p 1.10% Standard Chartered (STAN) 769.00p 1.05% Burberry Group (BRBY) 677.00p 0.80% Beazley (BEZ) 748.00p 0.54% JD Sports Fashion (JD.) 126.95p 0.51% Kingfisher (KGF) 276.90p 0.51%

FTSE 100 - Fallers

Rightmove (RMV) 536.60p -1.86% Diageo (DGE) 2,487.50p -1.31% Smith (DS) (SMDS) 456.40p -1.21% Smiths Group (SMIN) 1,758.00p -1.18% British American Tobacco (BATS) 2,767.00p -1.18% Ashtead Group (AHT) 5,240.00p -1.17% Unilever (ULVR) 4,718.00p -1.09% Berkeley Group Holdings (The) (BKG) 5,260.00p -1.03% SEGRO (SGRO) 891.00p -1.02% Weir Group (WEIR) 1,914.00p -0.98%

FTSE 250 - Risers

Crest Nicholson Holdings (CRST) 217.80p 2.25% PureTech Health (PRTC) 174.00p 1.99% Carnival (CCL) 1,108.00p 1.98% Diversified Energy Company (DEC) 1,029.00p 1.98% Playtech (PTEC) 636.00p 1.92% Alpha Group International (ALPH) 2,565.00p 1.79% Ocado Group (OCDO) 383.60p 1.75% CMC Markets (CMCX) 326.00p 1.72% Watches of Switzerland Group (WOSG) 392.20p 1.71% Senior (SNR) 171.60p 1.30%

FTSE 250 - Fallers

Genuit Group (GEN) 453.00p -2.28% Syncona Limited NPV (SYNC) 119.20p -2.13% ICG Enterprise Trust (ICGT) 1,306.00p -2.10% SSP Group (SSPG) 170.20p -1.90% Balanced Commercial Property Trust Limited (BCPT) 86.00p -1.83% 4Imprint Group (FOUR) 5,370.00p -1.65% Domino's Pizza Group (DOM) 298.40p -1.65% Grafton Group Ut (CDI) (GFTU) 1,026.40p -1.48% Genus (GNS) 1,748.00p -1.35% Scottish American Inv Company (SAIN) 514.00p -1.34%