London open: FTSE little changed after disappointing retail sales

Sharecast - At 0900 BST, the FTSE 100 was up just 0.1% at 7,907.07.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The FTSE 100 is expected to end the week on a subdued note, with minimal losses possible. The lack of lift-off in any meaningful way is likely to reflect ongoing concerns around economic and business activity following the miss on retail sales."

"At the same time, the US also saw its main indices slip in yesterday’s trading session, with futures now flat. The market is trying to digest a tough set of results from Tesla in particular, where margins are being sacrificed in the name of encouraging people to spend. This has wide ramifications for other growth companies in the region and could be a source of sensitivity for some time."

"The market will also be struggling to find a place to land in expectation of big-tech earnings next week, which should signal the health of the consumer industry, and either prop up or challenge some valuations, given the significant rallies seen since the start of the year. An important report by the Federal Reserve has shown that the US economy has stalled in recent weeks which could act as a drag on equities."

On home shores, figures released by the Office for National Statistics showed that retail sales fell by more than expected in March after the wet weather kept shoppers at home.

Retail sales volumes fell by 0.9% in March, following a downwardly-revised increase of 1.1% in February. Most analysts had been looking for a 0.5% decline. Within that, food store sales volumes eased 0.7%, reversing February’s 0.6% increase, while non-food stores sales were down 1.3%, compared to a 2.4% rise a month previously.

Retailers reported that poor weather conditions throughout much of the month - the sixth wettest March on record since 1836 - affected sales. Department stores and clothing shops were especially affected, with sales volumes off 3.2% and 1.7% respectively over the month.

Year-on-year, retail sales volumes were down 3.1% on March 2022 and 0.7% below February 2020, pre-pandemic.

In the three months to March, sales volumes rose by 0.6% compared to the previous quarter, the first rise in this series since August 2021.

Meanwhile, a survey out earlier showed that consumer confidence strengthened in April despite soaring food prices and inflation.

GfK’s latest consumer confidence index was -30, a six-point improvement on March and the highest since February 2022, when it was -26.

Within that, all individual measures rose, with expectations for personal finances over the coming year jumping eight points to -13. Expectations for the economic situation rose six points to -34, while the major purchase index was up five points at -28. The savings index, meanwhile, dipped two points to 19.

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Joe Staton, client strategy director at GfK, said there had been "a sudden flow of optimism".

He continued: "As food and energy prices continue to rise and inflation eats into wages, the cost-of-living crisis is a painful day-to-day reality for many. But are all consumers buckling under the pressure? On the evidence of April’s figures, the answer is no."

"The brighter views on what the general economy has in store for us, with April’s six-point rise cementing a 20-point rise since January, could even be seen as the proverbial green shoots of recovery."

"The major purchase index is higher than it has been for a year and will bring much needed cheer to retailers as head into summer."

In equity markets, miners were the worst performers, with Rio Tinto (LON:RIO), Anglo American (LON:AAL), Antofagasta (LON:ANTO) and Glencore (LON:GLEN) all lower as copper prices fell.

Glencore was in focus after saying it remained on track to exceed earnings forecasts, despite a dip in first-quarter production, thanks to strong trading profits.

Payments firm Network International (LON:NETW) surged after confirming it had received a "highly preliminary" rival 400p a share cash offer from Canada's Brookfield Asset Management. The latest bid trumps a non-binding takeover proposal from a consortium of CVC and Francisco Partners about a cash offer of 387p a share which Network said it was minded to accept if a firm bid was made.

Outside the FTSE 350, Sureserve (LON:SURS) rocketed after the social housing energy services provider agreed to be bought by French private equity firm Cap10 in a £214.1m deal.

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