© Reuters. Signage for the London Stock Exchange Group is seen outside of offices in Canary Wharf in London, Britain, August 3, 2023. REUTERS/Toby Melville/File Photo
By Sruthi Shankar
(Reuters) -London’s blue-chip share index rose on Friday, as the pound came under pressure from a much weaker-than-expected retail sales data, which further swayed expectations around when the Bank of England would start cutting interest rates.
The rose 0.6%, extending its climb for a second day, but still on course for a weekly loss.
Data showed British retailers suffered the biggest drop in sales in almost three years during December, raising the risk that the economy entered a recession in the fourth quarter.
Retail sales volumes shrank 3.2% between December and November as people did their Christmas shopping earlier than usual. The numbers were worse than economists’ forecast for a 0.5% drop.
“The BOE will become increasingly of the view that the economy is slowing quite dramatically and they need to start easing rates,” said Roger Jones, head of equities at London & Capital.
“Inflation does look like it will continue in a downward path despite the data earlier showing a small tick-up. In terms of the timing, we’re speaking Q2 when the bank will probably be arm-twisted to start cutting rates.”
The sterling dipped 0.2% after the data was released, in turn lifting dollar earners such as Shell (LON:) and AstraZeneca (NASDAQ:), which draw a large part of their revenue overseas.
The domestically focussed added 0.4%, but was on track for a weekly loss.
4imprint Group jumped 11.5% to become the top gainer in the midcap index after the advertising and marketing company raised its profit forecast.
Homebuilder Persimmon (LON:) climbed 2.3% after Morgan Stanley (NYSE:) upgraded the stock to “overweight” from “underweight.”
Wincanton rallied 47.3% to a 2-1/2-year high after CEVA Logistics, a unit of French shipping group CMA CGM, said it would buy the British logistics firm in an all-cash deal worth nearly 600 million pounds (about $719 million).
