The FTSE 100 was firmly on the front foot on Friday, with retail shares shaking off the impact of slow pre-budget retail sales in October.
UK retail sales fell 0.7% in October as investors held off making big purchases ahead of the budget. Investors, however, are looking past the soggy sales of October and taking an optimistic view of the FTSE 100’s consumer-facing companies which were trading broadly higher on Friday.
B&M Retail was 4% higher while Sainsbury’s and Marks & Spencer added 4% as the FTSE 100 gained 0.9%.
“It could be that people were simply keeping their powder dry, saving their pennies for the late half-term or to indulge over Christmas,” said Danni Hewson, AJ Bell head of financial analysis. “It could also be that unseasonably mild weather simply delayed the purchase of winter woollies which have been needed over the past week.”
A strong session in the US overnight also helped lift the mood on Friday, with interest rate fears subsiding and technology shares showing further signs of buoyancy.
“The FTSE is up taking its cue from Wall Street and eastern exchanges as risk appetite bounced back from earlier in the week,” said Derren Nathan, head of equity research, Hargreaves Lansdown.
“US unemployment claims came in below expectations reaching a seven-month low and although this may give hawks at the Fed a little more support, it’s also reflective on underlying strength in the US economy.”
Vistry was among the gainers, rebounding from heavy selling with a 3.4%. Peers Taylor Wimpey and Persimmon rose in sympathy. The poor retail sales data released on Friday increased the chances of an interest rate cut, which will always support the housebuilders.
Hopes of a rate cut were evident in the FTSE 100 banks as investors sold Lloyds, NatWest, and Barclays in anticipation of lower rates eroding their net interest margins.