Must read: UK bank shares falling, consumer confidence, retail sales

Our head of investment rounds up the morning's big news.

EUROPEAN MARKETS 

European markets have opened lower to end the week with investors digest the slew of PMI figures trickling out this morning. France’s composite flash PMI for March hit 54, rising sharply from 51.7 in February. 

Despite this week’s volatility, the FTSE 100 is up around 1% over the past five trading sessions and is on track to close the week in the green. However, it is still down by over 1.5% year-to-date. Smiths Group (LSE:SMIN) is one of just a handful of stocks trading higher today on the FTSE 100 after it raised its 2023 guidance.

Financials like Barclays (LSE:BARC), Lloyds Banking Group (LSE:LLOY) and NatWest Group (LSE:NWG) are trading near the bottom of the UK index as investor cautiousness lingers in the aftermath of the recent turmoil in the sector. The Bank of England Governor told the BBC that interest rates will go up again if firms raise prices, a day after the central bank raised tightened monetary policy for the eleventh time since December 2021.

UK CONSUMER CONFIDENCE

UK GfK consumer confidence rose to -36 in March, in line with expectations and improving from February’s figure of -38. Sentiment improved to a one-year high but remains gloomy by historic standards. The personal finance measure however remains low as inflation erodes take home pay and cost-of-living pressures persist.

Economic data, though still weak, has started to show incipient signs of improvement in the UK, with house prices, retail sales, confidence and PMI figures picking up off the lows as the mini-budget chaos fades into the rear-view mirror and the Bank of England approaches the end of the rate hiking cycle. Inflation remains a sticking point, having unexpectedly picked up again in February, going against recent months of improvement since October’s peak. 

UK RETAIL SALES 

British February retail sales fell by 3.5% year-on-year, exceeding expectations for a drop of 4.7%. On a monthly basis, the figure increased by 1.2%, the largest monthly increase since October 2022, also beating forecasts for growth of 0.2%. Strong discounts at department stores helped to drive non-food sales volumes. Food store sales rose in February partly thanks to reduce spending in restaurants and on takeaways amid the cost-of-living crisis. Auto fuel sales fell in February after January’s jump in car travel subsided as industrial action eased.

SMITHS GROUP 

Smiths Group has raised its full-year guidance again. It now expects at least 8% organic revenue growth versus its previous guidance for at least 7% with moderate margin improvement. First-half operating profit topped expectations hitting £241 million, rising 27% year-on-year. Organic revenue grew by 13.5% in the period while reported revenue grew by 25.6% to almost £1.5 billion. 

The industrial technology company said customer demand remains strong across most end markets. Its subsidiary John Crane helped operating profit to outperform in sectors like life sciences, pulp & paper and chemical processing. Smiths Group continues to focus on M&A, having already acquired bun in sockets company Plastronics in January. 

Shares have performed well in the first quarter, rising by more than 8%, with a gain of 14% over a one-year period, outperforming the FTSE 100.