By Barbara Kollmeyer
Stocks posted modest gains in London on Friday, with simmering hopes over high-level post-Brexit trade deal talks and the economy, after data showed a sixth straight gain for retail sales.
The FTSE 100 index /zigman2/quotes/210598409/delayed UK:UKX -0.97% rose 0.4% to 6,360.79, in what has been a choppy week that has gained 0.7%. The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.0368% was unchanged at $1.3270.
High-level post-Brexit talks continued on Friday, though they moved to a virtual setting after a member of the European Union’s negotiation team tested positive for COVID-19 . The U.K. left the EU on Jan. 31, but the two sides need to reach a deal over their future trading relationship before the transition period ends on Dec. 31.
“EU leaders have reportedly been briefed today that a deal is very close, though differences persist on the main sticking points of fisheries, governance and level playing field,” said Raffi Boyadjian, senior investment analyst at XM, in a note to clients.
“The next few days will be critical as it will be extremely difficult to extend the negotiations beyond the end of next week if a trade agreement is to be ratified by all parliaments by December 31,” the analyst said.
U.K. retail volumes increased 1.2% in October compared with the previous month, bringing the overall level 6.7% above February’s pre-pandemic levels, according to the Office for National Statistics.
Data showed the government borrowed £22.3 billion ($29.6 billion) in October, £10.8 billion more than a year ago, which is both the highest borrowing in that month and the sixth-highest borrowing in any month since monthly records began in 1993.
Some cyclical stocks that are poised to do better as economies recover were perking up on Friday, with shares of travel group TUI /zigman2/quotes/207049334/delayed UK:TUI +5.14% up 3.7%, airline easyJet /zigman2/quotes/202825892/delayed UK:EZJ +0.90% up 2%, and cruise operator Carnival /zigman2/quotes/202325446/composite CCL -0.62% up 1.7%. Movie-theater chain Cineworld /zigman2/quotes/206525056/delayed UK:CINE +1.23% was up 3.6%,
News of stronger retail sales boosted that sector, with shares of Marks and Spencer /zigman2/quotes/206225481/delayed UK:MKS +1.09% gaining 2% and JD Sports Fashion /zigman2/quotes/207007202/delayed UK:JD -2.54% rising more than 2%, along with a 1% plus gain for luxury-goods group Burberry /zigman2/quotes/205386705/delayed UK:BRBY -0.92% .
Also supporting the FTSE 100 were stronger commodity-related shares, with mining names Rio Tinto /zigman2/quotes/202627887/composite RIO -5.15% /zigman2/quotes/208934945/delayed UK:RIO -3.03% and Anglo American /zigman2/quotes/201381512/delayed UK:AAL -5.31% up 1% each and oil companies Royal Dutch Shell /zigman2/quotes/205095589/composite RDS.A -3.51% /zigman2/quotes/206428183/delayed UK:RDSA -1.38% and BP /zigman2/quotes/207305210/composite BP -4.75% /zigman2/quotes/202286639/delayed UK:BP -2.20% up by same amount.
Shares of Sage Group /zigman2/quotes/204528931/delayed UK:SGE 0.00% tumbled 11%, after mixed results from the multinational enterprise software group. “Declining organic operating profit margins have cast a shadow over its latest results and the guidance is for further margin contraction as it invests more in the business,” said AJ Bell investment director Russ Mould, in a note to clients.