Sterling extended its fall against the US dollar on Friday, spending the day stuck beneath $1.39, bruised by the US Federal Reserve's signal on Wednesday that interest rates could be raised sooner than expected.
The hawkish shift energised a stagnant dollar, sending the US currency to its highest level in months and putting pressure on the British currency which ended the week at $1,3814 - its lowest since mid-April.
London stocks also spent the day slumped. The FTSE 100 shed 135.96 points to end the day at 7,017. Only seven stocks among the blue-chips finished the day higher than they started.
"In what can only be described as choppy trading conditions, sentiment was given an additional knock [Friday] afternoon on the back of comments from St. Louis Fed President James Bullard who said he was leaning towards a US rate rise in 2022," said Michael Hewson, chief market analyst at CMC Markets UK, adding it was significant that Bullard will become a voting member of the Federal Open Market Committee next year.
"Market confidence that the US central bank would look through concerns about slightly higher average inflation [is] taking a bit of a knock."
Shares in Tesco fell 8.71p to 222.44p today, after Britain's biggest retailer reported growth had almost ground to halt over the past three months in the UK, up just 0.5pc.
Although the supermarket said online grocery orders rose 81.6pc, compared to before the pandemic, analysts questioned whether this would translate into profitability.
"As online accounts for a larger proportion of overall sales, variable costs associated with servicing the online business will rise, as fixed costs across their expansive store estate remain," said Richard Lim, chief executive of Retail Economics.
Tesco's share price was also hit by official data showing retail sales fell a surprise 1.4pc in May as the return of eating out in pubs and restaurants hit food sales, which slid 5.7pc.
One of the few risers on the FTSE 100 on Friday was London-listed Fresnillo, the world's largest producer of silver from ore, which gained 18.20p to 832.40p as a result of advancing silver price.
The spot price for silver finished the day up 0.35pc at $25.97.
The FTSE 250 mid-cap stocks were boosted by new and used car dealer Inchcape which finished the day up 34.83p to 797.33p after the company said its current-year earnings will top market estimates of £216m and investors overlooked warnings that semiconductor shortages remained a major source of uncertainty for the company.
However Inchcape's rally was not enough to stop the index slumping into the red mid Friday morning, weighed down by energy stock losses and shoe brand Dr Martens losing 15.80p to 422.40p.
That's all for this week. Here are some of today's top stories:
Thanks for following. See you on Monday.
Dow Jones drops 1pc
The Dow Jones has also fallen 1.16pc so far today, following Federal Reserve official James Bullard's comments that inflation was stronger than anticipated and it would take the central bank several meetings to figure out how to pare back stimulus.
The blue-chip Dow and the benchmark S&P 500 were set for their worst day in a month after Bullard, president of the St. Louis Federal Reserve, said he was among the seven officials who saw rate increases beginning next year to contain inflation.
"The commentary has sparked concerns about inflation and people are questioning how transitory it will actually be, with most of the data showing gains in excess of 3pc towards the end of this year," Sam Stovall, chief investment strategist at CFRA Research told Reuters.
The pound drops to $1.3815
Expert reaction: FTSE drops 1.7pc
Michael Hewson, chief market analyst at CMC Markets UK, comments:
It’s been a disappointing end to the week for stock markets in Europe, with the after effects from Wednesday’s Fed decision still reverberating, wiping out any prospect of gains in a week that saw new record highs for both the DAX and Stoxx600.
In what can only be described as choppy trading conditions, sentiment was given an additional knock this afternoon on the back of comments from St. Louis Fed President James Bullard who said he was leaning towards a US rate rise in 2022, much sooner than Wednesday’s changed “dots” of two by the end of 2023.
While Bullard may be not a voting member this year, he is a voting member next year, and as such his vote will count, furthering muddying the time line for markets as to when the Fed will move in response to inflation concerns.
This has given the US dollar an additional shove higher, as well as cutting the ground out from industrial metals, though oil prices have remained fairly resilient thus far.
Consequently, equity markets have fallen back sharply, with all sectors getting clobbered, with the FTSE100 moving back towards the lows this month, and the DAX following suit, as market confidence that the US central bank would look through concerns about slightly higher average inflation, taking a bit of a knock.
HSBC says French retail bank sale to cost €1.9bn
HSBC said today it will incur a hefty charge of €1.9bn (£1.6bn)with the sale of its French retail banking operations to French lender My Money Group.
AFP has more details:
London-headquartered HSBC said in a statement that the French sale, for a nominal one euro, would generate an estimated pre-tax loss of €1.9bn.
The business comprises 244 retail branches, serving 800,000 customers at the end of last year. HSBC said that about 3,900 employees would transfer to the buyer.
"The signing... for the potential sale of our French retail banking business represents a significant step in progressing the actions we announced during our strategic update earlier this year," said HSBC chief executive Noel Quinn.
He said it would allow HSBC to "dramatically simplify" its business in mainland Europe. The bank aims to complete the sale in the first half of 2023.
HSBC last month announced plans to exit the retail and small business banking market in the United States. It followed a tumultuous year that saw its fortunes take a hammering from the coronavirus pandemic.
HSBC makes 90pc of its profit in Asia, with China and Hong Kong the major drivers of growth. In February, it published a new strategy laying out plans to redouble its attempt to seize more of the Asian market.
Boohoo dodges major shareholder revolt at company meeting after 'sweatshop' scandal
Boohoo has dodged a major shareholder revolt to block the reappointment of co-founder Carol Kane to the board, reports Laura Onita.
Around 11pc of investors voted against the resolution on Friday at an annual meeting with investors, with a fifth of shareholders separately rebelling against bosses’ pay packets.
A bonus scheme was implemented in June 2020, which could lead to Boohoo’s founders and top management receiving £150m if the value of the company reaches £7.5bn over a three-year period. Boohoo’s market cap is £4.1bn.
In the run up to the meeting, two influential shareholder advisory bodies urged investors to vote against Ms Kane’s re-appointment as a director arguing the co-founder should be considered accountable for governance failings following criticism of how a supplier in Leicester treated its workers.
John Lyttle, chief executive, said Ms Kane’s presence on the board will be crucial in delivering “change” for the benefit of all stakeholders.
He added: “Carol plays an integral role in establishing the identities that sit behind each of the brands on our multi-brand platform.”
Ms Kane set up the retailer with Mahmud Kamani, now executive chairman, in 2006 after acting as middlemen between factories and street brands including New Look and Primark.
Cruise firm Carnival hit by fourth data breach in 18 months
FTSE and Nasdaq listed cruise line operator Carnival has suffered its fourth cyber attack in the last 18 months after passport and health data was lifted from its systems, reports Matthew Field.
Carnival, which owns Britain’s P&O Cruises, warned customers of a data breach that occurred on March 19, affecting crew, staff and guests.
In a letter sent to customers, first reported on by cyber security blog Bleeping Computer, Carnival said it had no reason to believe the data had been misused, but offered them free threat detection software for the next 18 months.
Carnival did not specify how many customers were affected by the breach. The cruise company has more than 150,000 staff and, prior to the pandemic, provided services to 13 million people. London-listed shares in Carnival fell 2pc on Friday.
It is the fourth time Carnival’s systems have been breached in the last 18 months after cyber attacks in March, August and December 2020. It previously disclosed that 37,500 people had been impacted by its August 2020 cyber breach.
US stocks dip at the opening bell
Wall Street's main indexes opened lower on Friday after Federal Reserve Bank of St. Louis President James Bullard said inflation was stronger than anticipated and it would take the Fed several meetings to figure out how to pare back stimulus.
The Dow Jones Industrial Average fell 200.7 points or 0.59pc at the open to 33622.7. The S&P 500 fell 17.1 points, or 0.40pc at the open to 4204.78, while the Nasdaq Composite dropped 64.4 points or 0.45pc to 14096.929 at the opening bell.
Analysis: EU-AstraZeneca verdict
Neither side is willing to admit defeat, writes Hannah Boland.
When the Brussels Court of First Instance made its decision today, both AstraZeneca and the European Commission said they welcomed the judgement on the vaccine agreement - which has been the subject of a bitter row for months.
From the EU side, the argument has been that AstraZeneca did not deliver the Covid jabs it promised. From AstraZeneca's perspective, the deal it signed was for it to make its "best efforts" to meet the order.
In truth, the ruling on Friday is not clear cut. The EU had asked for AstraZeneca to be fined 10 euros for each day of delay for every individual dose of the vaccine - a penalty the court agreed would be fair.
"The decision was based on the fact that AstraZeneca has committed a serious breach of its contractual obligations with the Commission and contractual commitments should be followed," commissioner Stella Kyriakides said on Friday.
AstraZeneca, however, argued that that overall the ruling was in their favour. AstraZeneca had been taken to court over the fact it said it would only supply 100m vaccines by the end of June, rather than the 300m jabs promised in the contract.
The Commission had pushed for AstraZeneca to deliver at least 120m doses by the end of June and has demanded UK-manufactured AstraZeneca jabs to hit that target or face the daily fine.
But, on Friday, the court ordered AstraZeneca to deliver just 80 million doses of its vaccine by the end of September, including 50 million doses which would need to be supplied earlier.
According to AstraZeneca, all other measures were dismissed, and "in particular the Court found that the European Commission has no exclusivity or right of priority over all other contracting parties".
Still, with both sides already tussling to claim victory, the row looks far from over.
AstraZeneca shares tread water on verdict
AstraZeneca shares are treading water after the verdict as investors decide what the deicision means for the company. They are currently down 0.05pc but still up 1.2pc on the week.
How did the EU-AstraZeneca dispute start?
Brussels took AstraZeneca to a Belgian court back in April, after the pharmaceutical giant said production issues meant it would only supply 100m vaccines by the end of June, rather than the 300m jabs promised in the contract.
Ursula von der Leyen, the European Commission president, repeatedly blamed AstraZeneca shortfalls for the bloc's initially slow vaccination roll-out. In Berlin and Brussels, there were also suspicions that some EU-reserved stock had ended up in the UK.
The commission had said it wanted AstraZeneca to deliver at least 120m doses by the end of June and demanded UK-manufactured AstraZeneca jabs to hit that target or face a daily fine.
EU lawyers had also said they wanted 10 million euros as penalties for each breach of the contract that the judge may decide.
AstraZeneca has always insisted it had not been in breach of its contract, which it says only requires it to make "best reasonable efforts" in delivering doses.
Brussels also claims victory in AstraZeneca court case
Brussels also claimed victory in the court case today, writes Hannah Boland.
The European Commissioner for Health and Food Safety Stella Kyriakides said: "I welcome today's decision by the Belgian Court of First Instance ordering AstraZeneca to urgently deliver 50 million doses to the European Commission."
She added 15 million doses would need to be delivered by July 26, another 20 million by August 23, and a further 15 million by September 27.
"The Court has also decided a penalty of €10 per missing dose. This decision is based on the fact that AstraZeneca has committed a serious breach of its contractual obligations with the Commission and contractual commitments should be followed."
AstraZeneca said it had already delivered 70 million doses of its jabs and was set to "substantially exceed" the 80.2 million doses it was being ordered to deliver by the end of the month.
Reaction: EU loses court case against Oxford vaccine maker
In a statement posted on the company's website, AstraZeneca said:
AstraZeneca today welcomed the ruling by the Court of First Instance in Brussels. The European Commission had requested 120 million vaccine doses cumulatively by the end of June 2021, and a total of 300 million doses by the end of September 2021.
The judge ordered delivery of 80.2 million doses by 27 September 2021. To date, the Company has supplied more than 70 million doses to the European Union and will substantially exceed 80.2 million doses by the end of June 2021.
All other measures sought by the European Commission have been dismissed, and in particular the Court found that the European Commission has no exclusivity or right of priority over all other contracting parties.
The judgement also acknowledged that the difficulties experienced by AstraZeneca in this unprecedented situation had a substantial impact on the delay.
AstraZeneca now looks forward to renewed collaboration with the European Commission to help combat the pandemic in Europe. The Company remains committed to broad and equitable distribution of the vaccine as laid out in the Advanced Purchase Agreement of August 2020.
AstraZeneca says EU has lost legal bid for more vaccine supplies by end-June
AstraZeneca has claimed victory in its legal case against the EU after a court in Brussels found that the bloc should not be given priority over other countries for jabs, reports Hannah Boland.
The judge at the Brussels court ordered that AstraZeneca deliver 80 million doses of its vaccine by the end of September, well below the 300 million that the European Commission had been seeking.
It dismissed EU claims that it should have exclusivity or right of priority over all other countries that AstraZeneca had struck deals with.
AstraZeneca said it had already delivered 70 million doses of its jabs and was set to "substantially exceed" the 80.2 million doses it was being ordered to.
Deloitte tells staff they can work from home forever
Deloitte has told its 20,000 UK staff that they can work wherever they want when Covid restrictions are lifted as the accountancy firm adopts a fully flexible approach, reports Simon Foy.
In an email to staff on Friday, Richard Houston, Deloitte’s senior partner and chief executive, said he will not mandate employees to be in the office for a set number of days or in specific locations.
“That means that our people can choose how often they come to the office, if they choose to do so at all, while focusing on how we can best serve our clients,” he said.
The move goes further than its Big Four rivals KPMG, EY and PwC, which have all said employees will be required to go into the office at least two to three days a week.
BofA, Credit Suisse bring forward forecasts for UK rate hike
Bank of America Merrill Lynch and Credit Suisse have brought forward forecasts for the first interest rate increase in the UK since the pandemic and now expect a hike from the second and third quarters of next year respectively.
The banks had previously ruled out a move before 2023 but the estimates follow an unexpected surge in inflation over the Bank of England’s 2pc target for the first time in almost two years and economic growth that is gaining momentum.
Here's the daily round-up from The Telegraph's Money team:
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BA plane damaged after falling on its nose at Heathrow
A British Airways plane has been damaged after tipping on to its nose while parked on the tarmac at Heathrow Airport.
Images posted on social media show the aircraft, believed to be a Boeing 787, surrounded emergency services vehicles, including police, fire brigade vehicles and ambulances.
An airline spokesman said:
A freighter aircraft has been damaged while stationary on stand.
As a freighter-only aircraft there were no passengers on board.
Safety is always our highest priority and we are investigating the matter.
The incident is not affecting other flights at the airport.
FTSE continues to drop
The FTSE 100 has dropped 1.1pc, as investors dwell on the prospect of rising US interest rates and official data showed UK retail sales slid in May.
Among the stocks weighing down the index are Tesco (down 3.27pc), Royal Dutch Shell (down 3.47pc), Melrose Industries (down 3.53pc) and Johnson Matthey (down 3.63pc).
Nvidia pledges $100m investment for UK supercomputer
Nvidia has pledged to spend $100m building a supercomputer in the UK as it hopes to receive approval for its $40bn purchase of British chip designer Arm, reports James Cook.
Jensen Huang, Nvidia’s chief executive, almost doubled a previous pledge to spend $55m on the British supercomputing project as his plan to buy Arm faces multiple competition investigations in the UK, US, the European Union and China.
The raised $100m investment into building the “Cambridge-1” supercomputer is just a “starting point,” Mr Huang told The Six Five Summit online conference.
“It’s a big investment,” he said. “It is the most powerful supercomputer in the UK and researchers are super-excited about it.”
Nvidia first announced its British supercomputer plans in October, pledging to make the facility available to healthcare researchers in the UK as part of a planned “AI Center of Excellence” that would be built in Cambridge as part of the acquisition of Arm.
Astrazeneca and GlaxoSmithKline expressed their interest in using the supercomputer last year when it was first announced. They hope to use the system to run artificial intelligence programmes that can aid drug discovery.
US stock futures mixed after a week focused on the Fed
US futures tied to the Dow Jones Industrial Average fell 0.2pc in pre-market trading, with the index poised for its worst week since it fell almost 3.3pc in late January.
S&P 500 futures were also down 0.1pc, putting the benchmark S&P 500 on course to snap a three-week winning streak.
Wall Street's main indexes were jolted earlier this week after the Fed unexpectedly signalled it could begin tapering its massive stimulus sooner than expected.
However, investors flocked back to heavyweight technology stocks yesterday, focusing on the Fed's projection that the economy will grow 7pc this year - faster than expected.
Shares of Apple Inc, Facebook Inc, Nvidia Corp and Google parent Alphabet lifted as much as 1.2pc in premarket trading today and futures tied to the tech-heavy Nasdaq are up 0.2pc.
Fresnillo rises, leading FTSE 100 for gains
London-listed Fresnillo, the world's largest producer of silver from ore, has gained 3.25pc today as a result of advancing silver prices.
The spot price for silver is currently up 2.04pc at $26.41.
Gold is also rebounding after dropping in the wake of a hawkish turn by the Federal Reserve, but it is still headed for the biggest weekly loss in nine months.
The metal climbed on Friday as U.S. bond yields eased. Prices tumbled this week after Fed officials signaled monetary policy tightening could start earlier than expected.
True Potential eyes Wall Street Spac float
A leading UK wealth management business is considering a potential $2bn “Spac” float on Wall Street, after it was announced yesterday that JPMorgan bought the Nutmeg platform for £700m.
The Evening Standard reported this morning that Credit Suisse’s US bankers are working on plans to merge True Potential with a "Spac" or special purpose acquisition company to launch it onto the US stock exchange.
The company, which has reportedly been looking for buyers for a month, provides products and technology to 1.4m private clients, and also has its own consumer investment platform.
EU lifts US travel restrictions
The EU has lifted travel restrictions for US residents, in an attempt to save the summer tourist seasons.
EU member states announced their decision today to add the US, as well as Albania, Hong Kong, Lebanon, Macau, the Republic of Northern Macedonia, Serbia, and Taiwan to its “white list” of countries which are open for non-essential travel.
The new rules will be in effect in a matter of days, as soon as they are published in the Official Journal of the EU.
The UK is still considering whether to allow quarantine-free travel for those who have been double vaccinated.
Denmark's first meme stock plunges
Orphazyme A/S, a small biotech firm that was transformed into Denmark's first meme stock last week, has been dumped by investors today after it failed to get a clear stamp of approval from US authorities for its only viable treatment.
The shares fell about 75pc in early trading in Copenhagen. The move brings its market cap to less than $150m, compared with $560m less than 24 hours ago.
This is “game-over” for all those speculating that Orphazyme might soar on sudden regulatory approval, Per Hansen, an investment economist at retail broker Nordnet told Bloomberg.
It’s been a period of “high-stakes gambling” and even if U.S. authorities had given their approval, “it wouldn’t at all justify” the recent gains in the stock, he added.
Starbucks slumps to UK loss
Starbucks slumped to a £41m loss in its UK business last year after Covid-19 restrictions brought a halt to commuter trade and stopped it serving customers indoors, reports Hannah Boland.
The company revealed revenues fell by almost a third to £243m over the year to the end of September in Companies House filings for the UK business. It said that profits were hit "dramatically" by the pandemic.
Starbucks' losses widened from £6.6m in 2019 to £41m in 2020, as Covid-19 restrictions meant the company was, at one point, unable to serve customers indoors and was only able to offer takeaways.
When restrictions were eased last summer, Starbucks said its performance had improved, and by September last year, it was trading at around 56pc of 2019 levels.
For those stores which are not franchised, Starbucks said it had not taken any furlough support from the Government during the year, but had continued to pay its workers in full. Around two thirds of Starbucks coffee shops are franchises.
Across its European business as a whole, Starbucks experienced a downturn in trading, with profit dropping by almost 40pc fo $104m (£75m) during the year.
Despite the hit to performance, Starbucks's European business continued to make payments to its US parent company, forking out $183m in dividends - something which it later said it had not declared as it was not required under standard accounting practices.
UK food and drink exports to the EU fall 47pc
UK food and drink exports to the EU fell 47pc in the year's first quarter, dropping £2bn lower, according to figures compiled by the Food and Drink Federation from an analysis of HMRC data.
Dairy exports dropped more than 90pc during the three month period compared with the same period in 2019. Fish fell by more than half and whisky fell by almost a third.
However exports to markets outside the EU were back at pre-pandemic levels, including countries such as China, Japan, Hong Kong and South Korea.
Airline stocks keep rising
Airline stocks EasyJet, Ryanair and Wizz Air all gained this morning, after HSBC raised its price targets on border re-opening momentum.
Wizz Air is currently up 2.25pc, Ryanair has risen 1.23pc and Easyjet lifted 0.58pc,
Travel shares took a beating earlier in the week after the government confirmed plans to push back plans to lift lockdown restrictions for another month.
However reports that double-vaccinated holidaymakers could be allowed to travel to amber-list countries without quarantining has helped airline stocks in particular recover.
Telecom Plus shares drop 3.5pc
Telecom Plus shares are trailing the FTSE 250, down 3.5pc after the utility supplier reported an annual dip in both revenue and profit as the company continues to suffer from Covid.
The company, which trades under Utility Warehouse and allows people to buy all their home services, including gas, electricity, broadband, mobile and home insurance from one place, registered revenue of £861.2m, down from £875.8m the year before while pre-tax profit also dropped £4m to £56.1m.
However Telecoms Plus said: "As covid-related government stimulus packages are progressively withdrawn, and the prospect of inflation looms, it is clear that household budgets will come under increasing pressure - an environment in which our business has historically thrived, with people looking to either save money on their bills or make money. "
Markets wipe out commodities gains
Despite discussion of a commodities boom, some markets have now wiped out gains for the year and several more are close to doing so.
Bloomberg has the details:
Soybean futures have erased their 2021 advance, sliding more than 20% from an eight-year high reached in May, while corn and wheat have also tumbled.
The Bloomberg Grains Spot Subindex slid the most since 2009 on Thursday, before edging higher on Friday as markets recovered some losses. Other commodities that have seen their big rallies evaporate include platinum, while once-surging nickel, sugar and even lumber have faltered.
The fact that some markets are falling while others -- including crude oil and tin -- are holding gains underscores how unevenly the complex is responding to economies reopening and expanding once again. While those materials have climbed on strong demand fundamentals, others face their own unique headwinds, such as an easing supply worries in soybeans and monetary policy uncertainty in the case of gold and silver.
Some materials also took a hit this week on the Federal Reserve’s signals for interest-rate increases, a rising dollar and China’s efforts to slow inflation. The Asian country has said it will release metals from state reserves in a timely manner to push prices back to a normal range, ramping up efforts to cool the surge in commodities.
Expert reaction: Retail sales fall 1.4pc in May
Jonathan Sparks, Chief Investment Officer at Private Banking and Wealth Management HSBC, commented:
Today’s May retail sales figures are a slight disappointment, falling short of expectations with a 1.4pc contraction and sobering compared to the fireworks of April’s release.
The broader picture suggests that consumers released pent up demand for the high street in April but then moved on to socialising and eating out in May, as restaurant bookings surged and pubs re-opened.
Even with today’s blip, retail sales are 9pc higher than before the Covid pandemic and 15pc up from January’s low.
The FTSE 350 Retail index has pulled back from the May high, as the Delta variant became more established, throwing some doubt on whether the pace of consumer spending can be sustained.
We’ll have to wait and see how this unfolds in the coming weeks, but for now there is enough positive economic momentum to justify our positive outlook on UK stocks.
Federal Reserve decision and rising coronavirus cases weigh on the pound
The pound has dropped to its lowest level against the dollar in more than a month as a surge in coronavirus cases dents confidence in the UK’s pandemic recovery.
The currency fell to as low as $1.3856 this morning, it's lowest since the end of April, as the dollar strengthened and more than 11,000 new cases of the coronavirus were recorded on Thursday.
It’s a setback for a currency that has risen 0.7pc since March, fuelled by a successful vaccination effort and speculation the Bank of England would hike interest rates sooner than its peers.
“Rising case numbers are certainly not helping sentiment,” Jeremy Stretch, head of G10 foreign-exchange strategy at Canadian Imperial Bank of Commerce, told Reuters.
The pound has fallen by 1.6pc since the US Federal Reserve signalled rate hikes sooner than expected. Read more about that decision here.
Tesco facing shortage of HGV drivers
Tesco is experiencing a shortage of HGV drivers but has a plan to deal with it and product availability in stores remains strong, its chief executive said today.
"In terms of labour availability, we've seen some shortage specifically in HGV drivers, but we're working really hard to address that," said Ken Murphy.
"We've already got plans to address the shortfall and we're working closely with the suppliers," he said.
On Wednesday the UK's Road Haulage Association (RHA) met with the government to highlight a "growing peril" to UK supply chains from a worsening HGV driver shortage.
Factors leading to the current shortage, which the RHA puts at 70,000, include reduced access to labour because of Brexit and the pandemic, and the loss of about a year of driver training and testing.
Car dealer Inchcape boosts mid-caps
London's FTSE 250 ended its three-day losing streak today, boosted by new and used car dealer Inchcape which said today its current-year earnings will beat market estimates.
Despite warning that chip shortages remained a major source of uncertainty, the company's shares have risen 6.2pc so far this morning, helping the FTSE lift 0.1pc along with industrial stocks.
Manufacturer Rotork Plc also climbed 2.5pc after Morgan Stanley upgraded the stock to "overweight".
The blue-chip FTSE 100 index dropped 0.3pc lower, pulled down by a fall in oil majors BP and Royal Dutch Shell on a weaker pound.
Despite reporting sales grew to £10bn in the 13 weeks to May, Tesco also fell 1.5pc as investors focused on the supermarket's slowdown in underlying UK sales growth and new data showed British retail sales fell unexpectedly by 1.4pc last month.
Tesco sales grow to £10bn
Tesco sales grew to £10bn in the 13 weeks to May 29, up 0.5pc even compared to last year when supermarkets struggled to meet demand as Britain turned into a nation of panic-buyers and stockpilers during the first few months of lockdown.
Sales were also up 9.3pc on the same period two years ago, before the pandemic.
Tesco's wholesale Booker business registered strong growth, with sales up 9.2pc to £1.77bn as the leisure sector reopened and restrictions eased.
Non-food and clothes sales also helped drive some of growth, with Tesco remaining able to sell non-food products through periods of lockdowns while non-essential retailers were unable to trade until April. General merchandise, which includes all non-food products, was up 10.3pc and clothing up 52.1pc in the period compared to a year ago.
However, in the Republic of Ireland, sales slumped 6.1pc to £641m as the grocer failed to match the strong sales from a year earlier. The retailer's central Europe division also could not keep up with the pace of growth, dropping 1.6pc to £940m.
The supermarket's results hints that online grocery shopping will outlive the pandemic. Tesco shoppers made 1.3m online grocery orders, up 81.6pc compared to pre-pandemic levels and 22.2pc compared to last year.
Richard Lim, CEO, Retail Economics commented:
The key question is whether the shift to online will persist beyond the effects of the pandemic. With one in ten consumers having tried online grocery shopping for the first time since the pandemic, it seems inevitable that many will adopt a new way of shopping permanently. For others, the reliance on convenient home deliveries is likely to have embedded, supported by more working from home.
While a new level of online demand will help improve operational efficiencies across the channel, there are still doubts on the overall impact on profitability. As online accounts for a larger proportion of overall sales, variable costs associated with servicing the online business will rise, as fixed costs across their expansive store estate remain. This pincer movement of rising costs will put significant pressure on profits, with further cost-cutting likely to be the immediate lever to pull.
FTSE has opened flat
The FTSE 100 has opened flat, trading around 7,153 points. The FTSE 250 is up 0.3pc at 22,610 points.
Surprise retail sales fall in May
Britons put socialising ahead of shopping last month after a surprise fall in retail spending, reports Russell Lynch.
Sales fell 1.4pc last month - a stark contrast with April's 9.2pc surge as shops reopened - after the return of eating out hit food sales, the Office for National Statistics said.
The 5.7pc slide in food sales offset pockets of strength elsewhere including a 9pc jump at furniture and hardware stores as Britons rushed to snap up garden furniture for outdoor entertaining.
May's figures were lower than expected but shoppers still have an estimated £200bn in pent-up savings to spend following three pandemic lockdowns.
Pound heads lower
Good morning. The FTSE is tipped to open lower and the pound has continued to sink against the dollar.
Sterling is on track for a 1.6pc weekly fall due to the strength of the dollar, which has pushed higher after hawkish comments from the US Federal Reserve earlier this week.
5 things to start your day
1) Lord Frost fires warning shot at Boris Johnson's spending blitz: The Cabinet minister and architect of the Brexit deal urged Britain to embrace a return to normality and rejects major spending plans.
2) Andrew Neil hits out at activists behind GB News boycott: Lead presenter on new channel describes Stop Funding Hate as "far left agitators and cranks" and attacks companies that bowed to its demands.
3) Vaccine boost means economy will grow twice as fast as eurozone, says CBI: Britain's GDP set to grow by 8.2pc this year, beating the eurozone’s 4.2pc and even the 7.5pc forecast for the US.
4) Pigs in blankets at risk this Christmas as staff shortages bite: UK factories are being forced to cut production as they struggle to retain workers.
5) Channel 4 set to be sold next year: Ministers prepare to open a consultation on the future of the government-owned public service broadcaster "within weeks".
What happened overnight
Asian shares inched higher on Friday but were set for a weekly loss.
MSCI's broadest index of Asia-Pacific shares outside Japan was barely above water in morning trade after four sessions in the red, edging up 0.01pc. Hong Kong's Hang Seng index gained 0.53pc and Seoul's KOSPI was up 0.16pc. Chinese blue chips swung between gains and losses, and were last down 0.1pc. Japan's Nikkei rose 0.31pc.
Coming up today
Corporate: Monks Investment Trust (Full-year results); Blue Prism (Interim results); Tesco (trading update)
Economics: Retail sales (UK), producer price index (Germany), inflation (Japan)