|CATEGORY: MARKET REPORT - CLOSE
Thu 11 Jan 2018
LONDON (SHARECAST) - (ShareCast News) - Share prices in London nudged higher on Thursday as strength from miners and defence companies offset weak retailers and housebuilders following uninspiring updates from Tesco, Marks & Spencer and Barratt Developments.
The FTSE 100 ended the session up 0.2% at 7,762.94, having hit a record intraday high of 7,768.95 earlier.
It was a volatile day for the pound, sinking to 1.122 against the euro earlier after the release of the minutes from the last European Central Bank revealed tightening on the horizon. Having been down on the dollar early doors, the pound later climbed 0.2% higher to 1.3542.
The ECB minutes revealed the governing council plans to revisit its forward guidance early this year, indicating to some economists that the central bank could end its asset purchases by around September and, depending on who you listened to, raise rates fourth quarter or first half of 2019.
Earlier, talk was of the dollar, as China's foreign exchange regulator dismissed a press report suggesting the country might be looking to slow down or halt purchases of US Treasuries as "fake news".
"The FTSE moves towards the end of the week in somewhat unremarkable fashion, with the headline UK stock market trading largely flat amid a distinct lack of fundamental drivers," said analyst Joshua Mahony at IG. "The gradual ascent in the pound will likely have something to do with the long-standing decline in the US dollar, yet with Nigel Farage calling for a second EU referendum, there will be some who see the potential for a Brexit reversal."
On the UK corporate front, Thursday was a veritable retail bonanza. Tesco fell after its sales for the Christmas period missed City forecasts. For the 13 weeks to 25 November, Britain's largest grocery group increased like-for-like sales 2.3% in the UK and Ireland, and then for the six-week festive trading period to 6 January, saw LFL growth of 2.0%. This was a fairly strong performance, but expectations were for 2.4% growth in the third quarter and 2.8% for Christmas.
Marks & Spencer's numbers were decidedly worse, with UK like-for-like sales off 1.4%. Over the 13 weeks to 30 December, M&S food LFL sales worsened by 0.4% due to what the group blamed on "ongoing trading pressures continued in the lead up to Christmas as consumer spending and choices reflected tighter budgets", though other supermarket groups seemed to do a lot better.
Card Factory fared the worst of the shopkeepers, however, with its shares folding 20% despite what it insisted was a "solid" Christmas trading period. The Christmas cards and wrapping paper seller said any earnings growth for this year will be limited due to the impact of foreign exchange and wage inflation.
FTSE 250 wholesaler Booker was also in the red despite saying third-quarter sales rose 3.4%, with like-for-likes up 3.8%, while outside the FTSE 350, shares in fast fashion brand Boohoo drifted lower despite upgrading its full-year forecasts and posted a doubling of its revenues for the four months to the end of December. Expectations are high, with many big brokers covering the fast-growing AIM-listed company.
It wasn't all bad news in retail though, with online electrical specialist AO World rallying after posting an 11% jump in revenue in the final three months of last year.
Moving into other sectors, housebuilder Barratt Developments was weaker after saying total completions improved in the first half of the year, but sales rates remained flat. Peers Taylor Wimpey and Persimmon also fell, while sector peer Bovis was flat ahead of its results due the following day.
Ultra Electronics was a big winner on the day, with its shares flying 21% higher after directors said the torpedo and sonobuoy maker saw "significant exposure to the strengthening US defence budget". Peers BAE Systems and Meggitt were higher after analysts at Citigroup said they were likely to be the largest beneficiaries of the recently approved US tax cuts in their sector.
Addictively acquisitive outsourcer Bunzl was another riser after saying it expects US tax changes to have a positive impact from this year and announcing yet more bolt-on additions in the UK and the US.
Recruiter Hays was in the black as it posted a 13% jump in second-quarter net fees thanks to a solid performance form its international businesses as the UK segment was broadly flat, while builders merchant Grafton climbed on the back of an update saying it expects 2017 earnings before interest, tax and amortisation to be slightly ahead of consensus estimates.
Jupiter Fund Management was weaker as it said total assets were up 3.7% in the fourth quarter.
Helped by an upgrade at Barclays, Just Eat rose the highest on the day, while Anglo American was up after an upgrade by Morgan Stanley. As well as stronger metal prices, the mining sector was also supported by a raft of target price upgrades from JP Morgan, alongside very supportive comments for Glencore.
Going the other way, Greene King and Metro Bank were hit by downgrades from Numis and Investec, respectively.
FTSE 100 (UKX) 7,762.94 0.19%
FTSE 250 (MCX) 20,737.92 -0.11%
techMARK (TASX) 3,522.11 0.36%
FTSE 100 - Risers
Just Eat (JE.) 803.80p 4.72%
easyJet (EZJ) 1,536.50p 3.89%
Anglo American (AAL) 1,761.00p 3.56%
Bunzl (BNZL) 2,050.00p 2.24%
Rio Tinto (RIO) 4,165.50p 1.87%
BHP Billiton (BLT) 1,628.00p 1.79%
British American Tobacco (BATS) 5,050.00p 1.71%
International Consolidated Airlines Group SA (CDI) (IAG) 668.00p 1.61%
BAE Systems (BA.) 585.80p 1.38%
Imperial Brands (IMB) 3,176.50p 1.37%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 301.60p -7.04%
Tesco (TSCO) 202.30p -4.53%
Barratt Developments (BDEV) 616.40p -2.71%
Barclays (BARC) 196.10p -2.53%
Mediclinic International (MDC) 602.40p -2.21%
Sainsbury (J) (SBRY) 248.60p -2.09%
Smith (DS) (SMDS) 502.20p -1.99%
Taylor Wimpey (TW.) 196.80p -1.85%
Vodafone Group (VOD) 228.45p -1.78%
Berkeley Group Holdings (The) (BKG) 4,142.00p -1.73%
FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 1,515.00p 21.59%
Grafton Group Units (GFTU) 810.00p 6.58%
Ferrexpo (FXPO) 314.80p 4.97%
Tullow Oil (TLW) 229.80p 4.69%
Hays (HAS) 196.30p 4.25%
Pagegroup (PAGE) 535.50p 3.78%
Nex Group (NXG) 605.00p 3.33%
OneSavings Bank (OSB) 410.40p 3.12%
Domino's Pizza Group (DOM) 350.00p 2.91%
Cobham (COB) 127.00p 2.79%
FTSE 250 - Fallers
Card Factory (CARD) 225.80p -20.04%
Greene King (GNK) 526.20p -6.00%
UDG Healthcare Public Limited Company (UDG) 778.00p -4.42%
Booker Group (BOK) 223.80p -3.91%
Workspace Group (WKP) 965.50p -3.84%
Ted Baker (TED) 3,006.00p -3.59%
TalkTalk Telecom Group (TALK) 131.30p -3.38%
WH Smith (SMWH) 2,156.00p -3.32%
Jupiter Fund Management (JUP) 585.00p -3.31%
Dignity (DTY) 1,789.00p -2.77%