FTSE 100 analysis: Surprise acceleration in UK retail sales – Top UK stocks

FTSE 100 hits 2-month high

The FTSE 100 is up 0.1% this morning and at its highest level in nearly two months.

The economic calendar is light today following early data out of the UK this morning as we discovered retail sales accelerated more than anticipated in June from May, although remained down from last year, while consumer confidence deteriorated for the first time in six months after falling to -30 in July from -24 in June, according to GfK.

Attention is on Canada this afternoon, when we have retail sales and the new housing price index due to be released.

FTSE 100 analysis: Where next for the UK 100?

The UK 100, which tracks the FTSE 100, is at its highest level in almost two months after breaking above the falling trendline this week. The index is once again testing the 7,650 ceiling that was in play in late May and early June this morning, like it did yesterday, and this is aligned with the 100-day moving average. A close above here could install confidence that it can climb toward the next level of resistance at 7,780. The RSI remains in bullish territory and suggests the rally has further to go and the candles seen over the past three sessions have also been bullish.

The index is likely to slip back toward 7,550 if it comes under renewed pressure. Below here, we could see it fall back to 7,450.

Top UK stock news

Keep an eye on retailers such as Next, JD Sports, Frasers Group, Dunelm and Currys today after we discovered UK retail sales were up 0.7% month-on-month in June. That accelerated from the 0.3% lift we saw in May and was much stronger than the 0.2% forecast. Retail sales were still down 1% from the year before, but this also eased from the 2.1% drop the month before and was welcome versus the 1.5% drop forecast by economists.

THG is down 0.1% this morning after announcing plans to simplify its business by selling its OnDemand division. The trade and assets of the unit have been sold to its existing management with some financial assistance of advisory and investment firm Gordon Brothers. Notably, it said the business will remain a customer of its Ingenuity platform. THG has also sold ProBikeKit to London-listed Frasers Group for £4 million. Frasers is up 0.2% in early trade.

Glencore is down 0.3% after it revealed its huge Marketing arm that trades commodities around the world has seen its business normalise following the beneficial volatility we saw in 2022. Glencore said it expects annual adjusted Marketing Ebit to be around $3.5 billion to $4.0 billion this year, way above its long-term $2.3 billion to $3.2 billion target range. That came as it revealed production of most commodities was lower in the first half of 2023. Output of its key commodities fell, with copper production down 4%, coal output down 2% and zinc dropping by 10%. It reiterated its full year guidance and said volumes of its three key metals will be weighted to the second half.

Firstgroup is up 0.4% after it said it has traded in-line with expectations since the start of the new financial year ahead of its annual general meeting later today. The travel stock said it has returned £70.9 million of the £75 million share buyback programme launched in December. It will launch a new £115 million buyback once that is completed, so long as it secures shareholder support today. Firstgroup plans to release interim results on November 23.

Polymetal is down 4.4% today after it confirmed its last day of trading on the London Stock Exchange will be on August 1. Shares will be suspended when markets close on that day. That is part of its re-domicile plan that will see it move to Kazakhstan.

Liontrust Asset Management is down 1% after it said its takeover offer for GAM Holding is ‘a full and final offer and will not be increased’. The proposed acquisition first came to light in early May and Liontrust has now conducted its due diligence, which has given it confidence that its offer is ‘good and fair’. It said it will need to book significant restructuring costs to get GAM back to breakeven but believes the unit can compliment its existing business.

easyJet has been upgraded to Buy at Stifel this morning. The airline is up 1.6% this morning at 483p.

Babcock has been upgraded to Buy at Citi, which has a price target of 500p on the defence firm. The stock is up 2.8% at 371.53p this morning.

Treatt has been given an Overweight rating from Barclays and a 750p price target. The ingredient provider is trading flat at 628p in early trade.

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