The FTSE 100 was up 0.2% at 7,499 in early afternoon trading on Friday, as oil prices fell to $116 per barrel and retail sales slumped on the back of spiking inflation.

According to the Office of National Statistics (ONC), retail sales reportedly declined 0.3% in February as inflation hit a 30-year record of 6.2%.

Inflation is currently anticipated to rise to 7.2% in the coming months and peak in winter at 8.7% in 2022, meaning retail sales could deteriorate further this year.

“Prices have been shooting up over the last three months, whilst inflation currently stands at 6.2% – looking at the difference between volume and value over the three-month period suggests an increase of 7.2% and definitely rising,” said said Danni Hewson, AJ Bell financial analyst.

“Until now, retail sales have proved remarkably resilient, still 3.7% up on where they were back in February 2020.”

The prominent value retailers are expected to take the brunt of rising costs, with razor-thin margins set to see suppliers potentially faced with little choice except to raise their prices at the expense of the consumer, or face margin pressure.

European value brand B&M experienced a fall of 2.9% to 563.4p per share.

Housebuilders and the Energy Price Cap

The market is also bracing for the rising price of oil, which some analysts predict could reach heights of $200 per barrel.

The energy price cap is scheduled to rise £693 in April, and companies will need to decide between absorbing the cost or passing it onto customers.

“People can’t spend what they don’t have, and that slow creeping erosion of living standards is about to get hit by an energy tsunami,” continued Hewson.

“Budgets will be reassessed and discretionary spend pared back. Retailers will have to make their own calculations about whether they can absorb the price pressures also assaulting them or to pass them on and hope that won’t totally squash sales volumes.”

Given retailing shares have already taken a big hit on expectations of higher inflation so far this year, it is now the turn of Housebuilding shares to feel the pressure of higher inflation. The FTSE 100’s housebuilding all fell heavily in the immediate reaction to poor retail sales at a time they are facing higher construction costs.

FTSE 100 Risers

The major oil companies remained steady, with Shell rising 0.8% to 2,099p and BP falling slightly by 0.1% to 388.5p in early afternoon trading on Friday.

The top risers on the FTSE 100 included Rolls Royce with a 3.2% increase to 95.2p after the company stepped in to offer the UK supplies of nuclear energy as the country cut ties to Russian oil reserves.

JD Sports Fashion saw a rise of 2.7% to 151.7p on the back of supplier Nike’s rising shares, which were up 0.8% at $133.2. Higher end retailers are expected to avoid the worst impact of rising prices.

Pershing Square Holdings climbed 2.5% to 2,8650p.

FTSE 100 Fallers

The market’s top fallers were led by Airtel Africa with a 10% slide to 139.7p after the telecommunications company announced the sale of its Malawian passive infrastructure firm to Helios Towers for $55 million.

Persimmon continued its decline by 3.4% to 2,117p on the back of rising material costs and concerns around the cost of living crisis. Taylor Wimpey fell 3.2% to 132.5p and Barratts fell 3%.

Reckitt Benckiser shed another 4% to trade just above key support at 5,400p. A break of the 5,400p level could see shares head down to 5,100p, the lowest point Reckitt’s traded at during the sell off at the beginning of the pandemic.

FTSE 250 index was up 0.57% to 21,013 along with the AIM all-share index up 0.14% to 1,037 despite retail sales declining and cost of living increasing in times of geopolitical turmoil.

FTSE 250 Risers

Homserve was the FTSE 250 top riser as it continued to gain following reports of a takeover approach by a Brookfield Asset Management. Homeserve shares were trading 8% higher going into the close on Friday.

Pantheon International shares increased 1.4% to 315p as the company reported a 1.3% increase in its NAV per share to 417.6p in its monthly update – their NAV now stands at £2.3bn. The firm also noted total shareholder return over five years of 77%. In terms of their portfolio, PIN invested £14.9m in Hg Saturn 3, a European buyout fund.

Murray International Trust shares gained 0.49% to 1,234p as the trust rose NAV from 0.9% to 14.1% in 2021. Murray increased their total dividends for 2021 to 55p, compared to 54.5p in 2020.

Residential property builder, Grainger saw shares rise 1% bucking the trend in an otherwise turbulent session for housebuilders and REITs. Redrow and Crest Nicholson were both down over 3%.

VinaCapital Vietnam saw shares gain 0.4% to 504p after the company reported a 6.9% increase in NAV per share and 33% rise in its half-year dividend.

FTSE 250 Fallers

Capricorn Energy shares were trading down 0.8% to 217p following the general meeting results in favour of the company’s resolutions.

Helios Towers shares sank 1.9% to 115p as the company acquired Airtel Africa’s passive infrastructure company in Malawi for $55m funded through the Old Mutual Infrastructure Investment Trust Fund. Despite the investment amounting to 20% worth of Malawian shareholdings, the company requires a license for local telecommunications infrastructure.

Petropavlovsk shares plummeted 15% to 1.5p as the gold miner is facing a liquidity crisis since Russian sanctions have resulted in an asset freeze for Gazprombank. The mining company has significant connections to Gazprombank including a $200m term loan.

“Is a cash flow crisis about to hit Russia-based gold miner Petropavlovsk? It has been caught up in sanctions on Russia whereby its lender Gazprombank is no longer able to buy its gold,” said Russ Mould, Investment Director, AJ Bell.

“Historically the bank had an agreement to buy everything Petropavlovsk produced, so the miner must now find a new taker for its precious metal. That’s going to be difficult in the current environment.

“Petropavlovsk has bills to pay and it will be tricky to settle up if there is no cash coming in the door. It’s no surprise to see the share price fall further on the news, now down 92% year to date.”

AIM Risers

Knights Group Holdings saw a 6.3% rise to 154p after confirming the acquisition of Langleys Solicitors for a cash consideration of £2.75m payable in 3 installments.

Kitwave group shares gained 0.7% to 145p as all 15 resolutions were passed in the annual general meeting.

Blue Star Capital shares soared 33% to 0.37p as the investment company reported a 24% increase in pre-tax profits to £2.1m from £1.7m in 2020 as a positive result from their blockchain developments. The company also saw NAV increase 36% to £12m from £9m.

Alliance Pharma shares rose 5.1% to 117p with the acquisition of ScarAway, allowing the company access to the scar treatment market. The company also acquired the US rights to Kelo-cote, a scar treatment product, leading one of its brands selling on a global level.

Cinema operators, Everyman Media shares were flat as the company reported 67% increase in admissions, higher than management expectations as the venues regain demand which was hindered due to Covid restrictions.

AIM Fallers

Igas and Pantheon Resources saw their shares fall 7.7% and 6.6% respectively as oil prices remain higher than the $110 mark.

Retailer Sosandar’s shares sunk 4.6% to 25.5p on fears consumers will begin tigheting their belts and reduce spending on non-essential goods.

Osirium Tech shares fell after a strong rise yesterday on the back on a contract win.

Alliance Pharma has officially entered the scar treatment market with its acquisition of ScarAway, the leading silicone-based scar treatment brand in the US. The company has also announced the launch of Kelo-cote to the consumer markets.

Alliance’s strategy in the US has been boosted by the acquisition of ScarAway, as it gives Alliance with a well-established distribution network from which the group will gain future growth.

The current retail value for the US scar treatment market is $90m per year.

ScarAway currently has silicone scar treatment available in sheet, gel and spray form and has generated $10m in net sales from February 2021 and 2022.

With their latest revenue, the company is the leader in the silicon scar treatment market.

ScarAway is the second-largest player in the scar treatment category, which covers both silicone-based and cream-based products, with a 28% market share, trailing Mederma which has 40%.

Kelo-cote available in gel and spray is an international brand recommended by healthcare experts globally.

Kelo-cote previously had a minor e-Commerce presence in the United States, with limited advertising and net sales of around $1m between February 2020 and 2021.

With Alliance’s existing rights and the newly acquired Kelo-cote rights in the US, the pharma company now has its first global brand in its portfolio.

Alliance paid Perrigo a total of $19.4m in cash and debt, which is the fair value of the intellectual property purchased.

The Board anticipates that the transaction will boost profitability immediately, with additional benefits expected in future years.

In the past year, ScarAway and Kelo-cote earned a total EBITDA of almost $2m.

Peter Butterfield, Chief Executive Officer, Alliance Pharma, stated, “I’m delighted to have completed such a strategically important and earnings enhancing acquisition for Alliance which creates our first fully global brand in Kelo-cote and significantly enhances our presence in the largest consumer healthcare market in the world.”

Alliance Pharma shares were up 2.5% to 114.8p following the new acquistions.

Open Orphan subsidiary hVIVO reported a £5 million study contract win with a European biotechnology company to test its intravenous antiviral candidate in a study on the respiratory syncytial virus (RSV).

Open Orphan saw its share price surge 8% to 14.5p in late morning trading on Friday after the announcement.

The company anticipates revenues from the contract to be recognised across 2022 and 2023.

RSV currently affects an estimated 50 million people globally and accounts for four million hospitalisations and 75,000 in-hospital deaths of children under five years old.

The study is expected to break new ground in the medical community’s understanding of the disease, in particular concerning adult patients.

Open Orphan and European biotech have reportedly collaborated in previous clinical work conducted by the Venn Breda team.

“I am pleased to announce this £5m contract to test our client’s antiviral candidate using the hVIVO RSV Human Challenge Study Model,” said Open Orphan CEO Yamin ‘Mo’ Khan.

“RSV is a significant threat to public health, and we are delighted to support this European biotech in the development of its antiviral candidate.”

hVIVO Chief Scientific Officer Dr Andrew Catchpole added, “This contract is a further demonstration of the significant value of human challenge studies.”

“Efficacy data provided by the Company following the completion of the study can lead to entry into Phase II as well as optimisation of a Phase III programme.”

“For Big Pharma as well as smaller biotechs, the substantial time and financial savings compared to typical field-based studies is increasingly making human challenge the trial design of choice for achieving early proof of concept data.”

VinaCapital saw its share price increase 0.1% to 502.7p today after it reported dividends would remain the same following a prior 33% rise in its half-year dividend.

The Vietnam-focused venture capital group noted a NAV per share of $8.4, alongside a share price total return over its interim of $6.3.

The company reported a NAV total return per share of 6.9% in the six months until 31 December 2021.

Vinacapital saw a 33% increase in dividends from 6c to 8c in October 2021, which they paid in December 2021.

The dividend announced in October of 8c has remained at 8c for 2022 and is scheduled for payment on 10 May 2022.

The firm’s board declined to raise the dividend until it ascertained its final year results given the current global uncertainties.

Vinacapital stated that its outlook was positive in light of the current geopolitical state, and reported that the long term fundamentals of Vietnam’s economy seem to provide a solid platform for advancement in 2022.