The FTSE 100 traded firmly in the red on Friday as investors took a cautious approach to mounting macroeconomic considerations.
London’s leading index was down 0.3% at the time of writing as traders fielded a barrage of factors, including poor UK retail sales, the upcoming UK election, and ongoing geopolitical tensions.
“It’s not been the best of weeks for the FTSE 100, with the UK blue-chip index on track to end the five-day session down 1.7%. Inflation, interest rates, politics, declining commodity prices, rights issues, the list goes on and it is fair to say the market has had quite a bit to worry about,” said Russ Mould, investment director at AJ Bell.
“Risk appetite has diminished judging by what’s moving on the market. Utility stocks rebounded after yesterday’s sell-off triggered by National Grid’s rights issue and whether a Labour government might nationalise the country’s key utility providers. That was the only sector in demand on Friday, pretty much everything else in the FTSE 100 went into reverse.”
There were few major movers on Friday, suggesting investors were fine-tuning portfolios rather than making big decisions about positioning.
The selling of FTSE 100 stocks was broad but contained. Seventy of the FTSE 100’s constituents were trading in the red, with all but National Grid dropping less than 3%. National Grid was down 10% as the dilution due to the rights issue announced this week took effect.
Retailing shares Tesco, Sainsbury’s, and Marks & Spencer posted surprise gains after UK retail sales fell much more than expected in April.
“Retail sales have sunk by far more than expected in the UK. There was a highly disappointing 2.3% decline in April, from a 0.2% dip in March,” said Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown.
“Clothing retailers have been particularly badly hit, with wet weather raining on efforts to get customers spending on new spring/summer wardrobes. Sports equipment and furniture stores were also met by weaker footfall, as the gloomy weather didn’t spark enthusiasm for house and garden touch ups, or exercise.”
Ocado was the FTSE 100’s top riser after JP Morgan raised its price target to 450p from 350p, maintaining its neutral rating on the stocks. Ocado shares were 2.5% higher at the time of writing.
