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Clothing drives up shop sales; Nationwide profits soar

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4.45pm: FTSE 100 recovers

The FTSE 100 recovered from a fall this morning to close the session just 1.74 points lower and end the week back above 7,000 at 7,018.05.


4pm: Heathrow passenger plan

Heathrow Airport will open a dedicated terminal for passengers arriving from countries with a high risk of Covid.

The decision follows criticism of the airport and the government after arrivals from red list countries were made to queue with other passengers.

But from 1 June, those travelling from red list countries will transit through Terminal Three, which has been closed for the past year.

They will then travel to a hotel where they will quarantine for 10 days.


11am: CMA opens consultation on Asda takeover

The Competition and Markets Authority ( CMA ) has opened a consultation on undertakings proposed by Zuber and Mohsin Issa, together with TDR Capital to address competition concerns over their acquisition of Asda Group,

The CMA announced on 21 April that it would refer the acquisition for an in-depth investigation unless the Issa Brothers and TDR offered acceptable undertakings to address the CMA’s concerns. The bidders subsequently agreed to sell 27 EG Group petrol stations which the CMA is examining.

It has set itself a deadline of 1 July 2021 to consider whether to accept the undertakings, or a modified version of them. As part of this process, the CMA is now consulting publicly on whether the proposals are sufficient to address the CMA’s competition concerns.

Before reaching a final decision, the CMA is therefore inviting interested parties to make their views known. The deadline for responses is 4 June.


9am: Stocks muted

London stocks dipped in early trade despite the release of better-than-expected UK retail sales data (see below).

The FTSE 100 again fell below the 7,000 threshold to trade 43.3 points lower at 6,976.39.

Builders’ merchant Travis Perkins gained after saying it has sold its plumbing & heating distribution business to an affiliate of alternative investment firm H.I.G. Capital for £325m in cash.

Biffa advanced after the waste management group struck a deal to buy the collections business and some recycling assets from Viridor Waste for £126m.

Close Brothers rose as it reported a strong third quarter, boosted by new banking business and busy trading at its Winterflood securities operation.


7am: Shoppers lift sales

LK Bennett Edinburgh shop

Sales of clothing in April jumped by nearly 70% compared with the previous month, as shoppers hit the high street.

Sales overall were 9.2% higher than the previous month, although online sales dipped, as lockdown measures eased and non-essential shops reopened, the Office for National Statistics (ONS) said.

Fuel sales increased, but remained below levels seen before coronavirus.

Sales volumes are now 10.6% higher than in February 2020, before the impact of the coronavirus pandemic. Compared with April 2020 – during the first national lockdown – retail sales were up 42.4%, exceeding expectations for growth of 36.8%.

Jonathan Athow a statistician at the ONS, said: “Clothing sales soared by nearly three quarters as consumers took advantage of being able to visit physical stores. Perhaps unsurprisingly, overall online sales dipped, but still remain high.”

Paul Dales, chief UK economist at Capital Economics, said the leap in retail sales volumes in April shows that households flooded back to non-essential shops once they reopened.

“This may be the last big leap in retail sales, but there is already evidence that the hospitality sector picked up the growth baton in May.”

“Overall, the data support our view that the recovery will be fast and full. Even so, we doubt the Bank of England will move to snuff it out until 2024.”


7am: Nationwide profits soar

Nationwide building society said profits rocketed as it improved interest income and margin while reducing costs.

The bellwether mortgage lender reported pretax profit for the year to 4 April of £823 million, compared to £466m in the previous year.

It said the profit increase was due to its focus on preserving its capital position and supporting its members.


Markets

UK equities are expected to open modestly firmer ahead of a range of economic data being released.

US markets were back in positive territory with the Dow Jones climbing 188 points and the S&P 500 pushing forwards by 43 points.

The mood in Asia this morning was also positive in Japan but negative in Hong Kong.

Japan’s Nikkei 225 is up 217 points.



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