FTSE 100 gains after positive April retail sales; ASOS seeks investment

U.K. stock markets largely traded higher Friday, helped by signs of economic resilience after the release of stronger-than-expected April retail sales data.

At 04:15 ET (08:15 GMT), the benchmark FTSE 100 index traded 0.3% higher, the mid-cap FTSE 250 dropped 0.1%, while the combined FTSE 350 rose 0.1%.

Data released earlier Friday showed that the volume of goods sold in stores and online climbed 0.5% from March, ahead of the expected 0.3%, and a significant improvement from the drop of 1.2% the prior month, a figure that was revised weaker.

This data suggested that U.K. consumers are surprisingly resilient in the face of highly elevated inflation, with sales gaining in three of the past four months.

“The year-long retail recession we saw in 2022 looks increasingly like it’s over,” said analysts at ING, in a note, “and with real wage growth set to become less negative, the worst is probably behind us for the sector.”

That said, the stubbornly high U.K. consumer prices, with data released earlier this week showing Britain with the joint highest rate of inflation among the G7 countries, along with Italy, mean that the Bank of England is likely to hike interest rates once more when it next meets in June.

“If we want to have prosperity, grow the economy, reduce the risk of recession, we have to support the Bank of England in the difficult decisions they take,” Chancellor Jeremy Hunt said in the Sky interview Friday. “It’s not a trade-off between tackling inflation and recession, in the end the only path to sustainable growth is to bring down inflation.”

Sentiment was also boosted by a Reuters report that suggested negotiators appear to be closing in on a deal that would raise the U.S. government’s $31.4 trillion debt ceiling for two years, potentially averting an economically damaging U.S. default.

In the corporate sector, ASOS (LON:ASOS) stock rose 1.5% after the online fashion retailer announced plans late Thursday to raise up to £80 million (£1 = $1.2351) from investors in order to strengthen its balance sheet.

AstraZeneca (NASDAQ:AZN) stock rose 0.8% after the pharma giant announced positive late-stage trial results of a combination of its drugs as a cancer treatment.

Rio Tinto (LON:RIO) stock climbed 4% after Morgan Stanley raised its price target on the miner to 5800 pence, offering around 17% upside to its current share price.