FTSE flat as retail data disappoints and NatWest posts loss

After yesterday afternoon’s retreat, the FTSE 100 held steady today, despite the release of disappointing retail sales data and NatWest Group (NWG) swinging to a loss in 2020.

The blue-chip index trading up just one point at 6,618, having fallen 1.4% yesterday in response to higher-than-expected US jobless claims. 

Figures showing UK retail sales slumped 8.2% last month from December were significantly worse than the 2.5% fall forecast by economists in a Reuters poll, and reflected the impact of the third national lockdowns with non-essential stores forced to close.

The proportion of sales done online surged to 35.2% of the total, the highest on record, according to the Official for National Statistics. That compares with 19.5% reported in January 2020.

‘Sales have fallen off a cliff again, with the lockdown in January proving even more punishing for retailers than the November restrictions,’ said Hargreaves Lansdown’s Susannah Streeter.

‘With the economic outlook bleak given the rise in unemployment expected, building up financial buffers is a prudent course of action, but still a difficult pill to swallow for struggling retailers.’

NatWest reported a pre-tax loss of £351m pounds for the year, slightly better than expectations. The bank will make a return to the dividend list, with a 3p per share distribution, and will also wind down its Irish arm.

‘Margins have been squeezed to uncomfortably low levels and, like Barclays (BARC), NatWest has set aside billions in extra capital to cover a potential spike in bad loans as a result of the pandemic,’ said Adam Vettese, analyst at investment platform eToro,

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‘The return of bank dividends is welcome, but it should not be taken as a sign of health in the wider banking sector.’

Its shares rose 1.6% to 174p, after UK lenders gave up ground on the back of Barclays’ results yesterday.

Mining and materials companies, again, provided much of support for the FTSE with Antofagasta (ANTO) rising 3.3% to £17.72 and Evraz (EVR) up 3% to 548p.

Hospitality stocks were also solid performers, with InterContinental Hotels Group (IHG) firmed 2% to £50.86.

AstraZeneca (AZN) led the fallers among blue chips, its shares flagging down 2% to £73.03. Hikma Pharmaceuticals (HIK) flagged 1.6% to £23.54.

The more domestically focused FTSE 250 mid-cap index did better, up 72 points, or 0.3%, to 21,006. Data revealing a strong decline in coronavirus infections in England during yesterday released yesterday raised hopes of restrictions easing.

Future (FUTR) jumped 4.8% to £19.94, after the magazine publisher raised earnings guidance. EasyJet (EZJ) rose 2.4% to 817p.

As among larger stocks, healthcare names led the fallers. Indivior (INDV) slumped 6.5% to 130p. Oxford BioMedica (OXB) dropped 2% to 975p.

In a busy day for investment trust news, the City of London (CTY) board said it was confident it would be able to increase the dividend for the fifty fifth consecutive year. Interim results covering the second half of 2020 reported a net asset value total return of 6.9% versus 9.3% for the UK market. The share price total return was 12.3% as the premium the shares were trading at widened to 5.5% from 0.4% at the end of June. The shares rose 0.6% to 360p.

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Tritax Eurobox (EBOX) announced plans to raise £173m (€200m) through a share placing and other measures. The issue price is at 2.4% discount to yesterday’s closing share price, with net proceeds to be deployed within 3 months. EBOX’s stock fell 1.1% to 104p.

Aircraft leasing investment company Amedeo Air Four Plus (AA4) has reached an agreement to terminate Nimrod Capital’s appointment as manager, effective from 31 January 2021. Its shares, already trading at close to 80% discount, fell 1.5% to 30p with the outlook remaining uncertain.



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