FTSE 100 grinds out gains as retailers rise

The FTSE 100 ground out gains on Friday despite ongoing concern around a possible invasion of Ukraine by Russia.

The FTSE 100 was trading 0.4% higher in afternoon trade on Friday as markets looked past Ukraine-Russia tensions to better than expected retail sales and a fairly decent set of figures from Natwest.

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“The FTSE 100 ticked higher on Friday as nervousness around a potential all-out conflict in Ukraine persists,” says AJ Bell financial analyst Danni Hewson.

“Better-than-expected retail sales suggest that, for now, the increased cost of living is not preventing Britons from hitting the shops.”

UK retails sales rose at the fastest rate since April in January and spurred investor interest in the FTSE 100’s UK retail and consumer facing companies.

JD Sports were 1.6% higher at the time of writing and Whitbread added 0.9%. Burberry shares also cheered the propensity of Brits to splash their cash gaining 2%.

Although shoppers bounced back from an Omicron-induced lull in December, analysts cautioned the good times may be short lived.

“Retailers will be cheering on signs that shoppers are voting with their feet to support the high street, but plenty of big spenders may slink away in the months to come. The sales uplift in January shows the Omicron recovery is underway but retailers haven’t yet recouped all of December’s losses,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“At some point lockdown savings will be spent, and the rapid rise in prices on supermarket shelves, energy bills and petrol forecourts, combined with looming tax increases, is highly likely to put a dampener on consumer spending.”

Reckitt Benckiser was the FTSE 100’s top riser as investors continued to buy into the consumer group following a strong set of results this week.

Natwest and UK banks

NatWest shares dipped 2% after they announced a return to profit but failed in increasing their Net Interest Margin, a key measure of banking profitability.

“Natwest has slipped a little bit behind target on cost reduction, thanks to higher inflation, which may be adding to some investor nervousness and the company is yet to see any progress on that key measure of profitability – net interest margin,” said Danni Hewson.

Nonetheless, Lloyds and Barclays shares rallied in anticipation of similarly positive updates in the coming days – without the negativity observed in Natwest’s report.

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