FTSE higher after better-than-expected UK retail sales, NatWest beats forecasts and appoints interim CEO Paul Thwaite on permanent basis

“As we head towards the spring, the market seems to be getting more optimistic and, after a tricky few weeks, the FTSE 100 is close to regaining the levels it saw at the start of 2024,” says AJ Bell Investment Director Russ Mould.

“The inflation shock from the US earlier in the week seems to have been shrugged off for now, even if it has pushed back expectations for when the Federal Reserve will start cutting interest rates.

“Gains in Asia and the US overnight were augmented by better-than-expected results from NatWest which helped drag the rest of the banking sector higher and the retail sector was lifted by a pretty stunning rebound in retail sales in January from December’s miserable figures. The data was way ahead of expectations and suggests, despite the UK slipping into a technical recession, the UK consumer remains surprisingly resilient.

“Later today the market will be able to weigh a measure of consumer sentiment from the US and the latest producer prices index reading. So-called factory gate prices are significant because when manufacturers and other producers charge more for goods and services the higher costs usually feed through to the consumer.”

Natwest

“The early muted reaction to NatWest’s latest update was no real surprise. Better than expected profitability and distributions to shareholders are fine but any optimism was tempered by news medium-term returns targets have been watered down.

“Achieving the highest annual profit since 2007 could be viewed in two ways – yes, clearly a key milestone and measure of progress after years of false dawns and stuttering recovery efforts, but it took 16 years to get there after the financial crisis.

“Still, as the trading session progressed, investors seemed to warm to the numbers and, overall, there will be relief in the government that NatWest hasn’t served up a major stinker ahead of an expected share offer to the public later this year.

“The appointment of interim boss Paul Thwaite on a permanent basis provides some continuity and that may reassure the market given his predecessor left not because the strategy wasn’t working but for extraneous reasons.

“The agency which manages the state holding in NatWest had also made it very clear that stable leadership was an important prerequisite to getting any big placing in the stock away.”

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