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FTSE 100 recovers as retail sales grow 1.4%

The FTSE 100 closed at 7,387.8 on Friday, after the index recovered on a positive slate of results from the Office of National Statistics (ONS), which reported that UK retail sales grew 1.4% in April despite a crushing 9% rate of inflation.

Non-store and online retailers experienced a 3.7% surge as a result of stronger clothing sales, which might serve to assuage investor fears over retail group stocks, which have seen dramatic falls in light of inflation fears over the last few months.

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“Clothing sales have been more resilient than expected, according to the new ONS data. Boohoo and ASOS both enjoyed a share price jump on the news as investors were taken aback by the sales trends,” said AJ Bell investment director Russ Mould.

“Recent months have seen shares decline in both companies as the market feared casual spending on tops, dresses and shirts would fall given that buying fewer non-essential clothes would be an easy way to save a bit of money now needed to pay for gas and electricity.”

The index appears to be one of the stronger markets to weather the economic storm, as the FTSE 100 was dragged back up from its gloomy Thursday depths.

“Investors may feel as if they’ve been soaked by a torrential shower given the state of the markets this year. Look closer and it’s clear that the FTSE 100 is the one with the best umbrella,” said Mould.

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Royal Mail shares gained 3.8% to 311.5p after its shaky results on Thursday, which reported some positives, including a 0.6% rise in revenue to £12.7 billion compared to £12.6 billion the last year.

The company announced a doubled dividend payout, with a full-year payment of 20p per share against 10p year-on-year.

Meanwhile, investor moods were further lifted as Chinese measures to lift the struggling economy rolled in, with the Hang Seng rising 3% as China’s central bank announced a reduction in a key lending rate.

Insurance giant Prudential, which shifted its focus to Asia in 2021, benefited from the recovering Chinese market, with shares in the group closing 2.5% higher at 1,000p.

The rally in China also pulled a range of miners up the FTSE 100, with Croda closing 2.3% higher at 6,706p, Anglo American gaining 1.7% to 3,526p, Rio Tinto increasing 2% to 5,454p, Endeavor up 1.4% to 1,844p and Fresnillo rising 1.1% to 783p.

“Boring old commodity producers, utility providers and tobacco stocks have come to the UK market’s rescue, proving that successful investing is not all about backing the next big go-go growth stock,” said Mould.

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