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 UKX, +0.93% rose 0.9% to 7,678.24, and was poised to gain 1.2% for the week. That is as the pound GBPUSD, -0.3135% 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 RIO, +0.27% RIO, +3.05% rose 2%, and BHP BHP, +2.65% was up 1.8%.
Shares of NMC Health NMC, +7.15% 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 AHT, +4.53% shares shot up 5% after the machinery rental company was upgraded to overweight from equalweight at Morgan Stanley.
International Consolidated Airlines Group IAG, +6.52% 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.