London Markets: Consumer sentiment and retail rebound in the U.K., but FTSE 100 under pressure


Upbeat economic data failed to give U.K. stocks a boost on Friday, with the pound surging and shares of heavily weighted AstraZeneca, Diageo and Unilever leading the way south.

“It looks like a hangover from Wall Street, with [COVID-19] pandemic fears in particular. On top of that, the strength of sterling is also working against the FTSE 100 in particular,” said Richard Hunter, head of markets at Interactive Investor, in emailed comments.

The FTSE 100 index

fell 0.5% to 6,901.59, and was poised for a drop of 1.7% on the week, the first losing weekly session in three. The pound

climbed 0.3% to $1.3882 against the dollar, which was weaker across the board as investors fretted about a report that the administration of President Joe Biden was considering a tax hike on wealthy Americans.

U.K. investors were absorbing a fresh batch of data, starting with the GfK consumer confidence barometer that stood at minus 15 in April, a one-point gain from the previous month. While the reading set a new COVID-19 pandemic high, the on-month increase was much lower than a seven-point hike registered in March and February’s five-point rise.

The survey indicates Britons “remain cautious about the pandemic and its economic consequences,” said Joshua Mahony, senior market analyst at IG, in a note to clients.

Other data showed a jump in retail sales for March, a surge of 5.4% against the previous month, with gains by nonfood stores and jumps of 17.5% and 13.4% in clothing stores and other nonfood stores respectively amid a gradual ease in COVID-19 restrictions in the country.

“With many having saved heavily over the course of the past year, clothing sales in particular gained traction as shoppers prepared for the improving weather,” said Mahony. “Undoubtedly, the reopening of nonessential stores in April will ensure another fresh surge in spending this month, with the economic outlook in the U.K. improving with each passing month.”

The IHS Markit/CIPS flash U.K. composite output index climbed to 60 in April, an 89-month high, with the services index at an 80-month high of 60.1. “In more than 23 years of PMI [purchasing managers index] history, we have only seen one spell of faster growth than this, recorded between August and November 2013,” said Chris Williamson, chief business economist at IHS Markit, in a press release.

Most sectors were in the red. As for heavily weighted stocks on the move, shares of pharmaceutical company AstraZeneca


fell 1.7%, and those of drinks maker Diageo


dropped over 2%.

Some reopening plays were under pressure, with shares of International Airlines Group

down over 3% and low-cost carrier easyJet among the top losers on the FTSE 250 index

On the upside, shares of transport operator First Group

surged 7%, after announcing a £3.3 billion ($4.6 billion) deal to sell two U.S. bus units, including its iconic yellow school bus operations.

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