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Jan. 17, 2020, 7:01 a.m. EST

Dismal retail sales data report drives FTSE 100 higher and pound lower as rate-cut fever builds

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By Barbara Kollmeyer, MarketWatch


Getty Images
Christmas shoppers on Marylebone High Street on December 23, 2019 in London, England.

London stocks rose and the pound fell on Friday, after disappointing sales data drove up expectations for an interest-rate cut when the Bank of England’s Monetary Policy Committee meets at the end of the month.

The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.73%  rose 0.9% to 7,678.24, and was poised to gain 1.2% for the week. That is as the pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.2862%  fell 0.3% to $1.3033, continuing to push lower after previous data showed December retail sales falling 0.6%.

“Economists were expecting an increase of 0.5%, so the reading was a big miss on forecasts,” said David Madden, market analyst at CMC Markets, in a note to clients. Stripping out fuel, retail sales fell 0.8%, against expectations for 0.7% growth.

“Seeing as the December report includes the important Christmas period, the sharp fall is particularity distressing. The markets are now pricing in a roughly 70% chance of an interest-rate cut from the Bank of England—the next meeting will take place later this month,” Madden told clients in a note.

Several Bank of England policy makers have voiced support for an interest-rate cut recently, while data earlier this week showed consumer prices falling, which also helps build a case for policy easing.

Gains in London were in step with positive action across European markets and firmer U.S. stock futures as a positive earnings week and upbeat trade news pushed Wall Street equities to a record on Thursday.

And data on Friday showed the Chinese economy stabilizing, with 2019 growth coming in at 6.1%, news that lifted mining stocks as the country is a big buyer of metals. Shares of Rio Tinto /zigman2/quotes/202627887/composite RIO -6.21%   /zigman2/quotes/208934945/delayed UK:RIO +0.57%  rose 2%, and BHP /zigman2/quotes/203323256/delayed UK:BHP -0.18% was up 1.8%.

Shares of NMC Health /zigman2/quotes/205240429/delayed UK:NMC +5.47%  climbed 7% after the private health care operator said it would hire a former director of the Federal Bureau of Investigation, Louis Freeh, and his firm to look into questions raised by short seller Muddy Waters over the company’s finances.

Ashtead Group /zigman2/quotes/200232063/delayed UK:AHT -0.27%  shares shot up 5% after the machinery rental company was upgraded to overweight from equalweight at Morgan Stanley.

International Consolidated Airlines Group /zigman2/quotes/208070069/delayed UK:IAG -0.64%  shares rose 6.5%, leading London gainers after the multinational airline holding company removed the cap on ownership of shares by non-EU investors.

“This removes an overhang on the shares from the last year and should be taken positively by the market,” said Daniel Röska and Alex Irving, analysts at AB Bernstein, in a note to clients.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
7,104.78
-52.05 -0.73%
Volume: 328,703
Feb. 25, 2020 1:47p
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/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.2967
+0.0037 +0.2862%
Volume: 0.0000
Feb. 25, 2020 9:02a
loading...
/zigman2/quotes/202627887/composite
US : U.S.: NYSE
$ 51.23
-3.39 -6.21%
Volume: 2.85M
Feb. 24, 2020 6:30p
P/E Ratio
6.51
Dividend Yield
6.46%
Market Cap
$64.53 billion
Rev. per Employee
$852,406
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/zigman2/quotes/208934945/delayed
UK : U.K.: London
3,988.00 p
+22.50 +0.57%
Volume: 988,590
Feb. 25, 2020 1:47p
P/E Ratio
6.55
Dividend Yield
7.75%
Market Cap
£64.42 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203323256/delayed
UK : U.K.: London
1,567.00 p
-2.80 -0.18%
Volume: 1.53M
Feb. 25, 2020 1:47p
P/E Ratio
10.76
Dividend Yield
7.08%
Market Cap
£79.38 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/205240429/delayed
UK : U.K.: London
894.60 p
+46.40 +5.47%
Volume: 1.30M
Feb. 25, 2020 1:46p
P/E Ratio
8.98
Dividend Yield
N/A
Market Cap
£1.77 billion
Rev. per Employee
£112,298
loading...
/zigman2/quotes/200232063/delayed
UK : U.K.: London
2,601.00 p
-7.00 -0.27%
Volume: 491,044
Feb. 25, 2020 1:47p
P/E Ratio
14.69
Dividend Yield
1.56%
Market Cap
£11.73 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/208070069/delayed
UK : U.K.: London
562.40 p
-3.60 -0.64%
Volume: 5.46M
Feb. 25, 2020 1:47p
P/E Ratio
5.75
Dividend Yield
3.74%
Market Cap
£11.24 billion
Rev. per Employee
N/A
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Barbara Kollmeyer is an editor for MarketWatch in Madrid. Follow her on Twitter @bkollmeyer.

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