LONDON MARKET CLOSE: FTSE 100 Continues Strong Run Amid Fall In Pound

The blue-chip FTSE 100 index extended its astonishing winning run to ...

Alliance News 12 January, 2017 | 12:58AM
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LONDON (Alliance News) - The FTSE 100 ploughed its way to another record high on Wednesday, lifted by a fall in the pound to its lowest level against the dollar since the flash crash in October.

The blue-chip FTSE 100 index extended its astonishing winning run to twelve consecutive sessions and its tenth consecutive record high close. On Wednesday, the index ended up 0.2%, or 15.02 points, to 7,290.49, after reaching a new intraday all-time high of 7,328.51.

"The common theme of a falling currency and rising stock market of late has continued with the FTSE 100 rallying to post yet another record high," said David Cheetham, market analyst at contracts-for-difference provider XTB.

The pound fell to its lowest level against the dollar since the flash crash in October 7 at USD1.2037. However, by the London stock market close, sterling traded the dollar at USD1.2130. At the close on Tuesday, the pound traded the dollar at USD1.2162.

The sharp appreciation of the pound to the dollar was driven by a fall in the dollar as US President-elect Donald Trump held his first press conference since July.

At the European equities close on Wednesday, the euro traded the greenback at USD1.0513, compared to USD1.0577 at the same time on Tuesday.

The price of gold slipped to a low of USD1,177.10 an ounce, but after the late fall in the dollar it rose to USD1,186.18 an ounce by the close on Wednesday. The metal traded at USD1,187.33 an ounce at the close on Tuesday.

The FTSE 250 index underperformed its blue-chip peer to end down 0.1%, or 19.16 points, to 18,394.11. The AIM All-Share closed up 0.1%, or 0.55 points, at 870.24.

The BATS UK 100 index ended up 0.1% at 12,313.05, the BATS 250 finished down 0.3% at 16,719.15, and the BATS Small Companies closed up 0.8% at 11,051.96.

In Europe, the French CAC 40 ended the day flat and the German DAX 30 ended up 0.5%

At the London close, the Dow Jones Industrial Average was down 0.1%, the S&P 500 was down 0.2% and the Nasdaq Composite was up 0.9%.

In UK company news, J Sainsbury achieved record sales over Christmas thanks to its acquisition of Argos last year.

The supermarket chain reported growth in sales in the third quarter of its financial year boosted by a record Christmas week, and said it is well placed to "navigate the external environment" despite a "very competitive" market.

Total retail sales excluding fuel in the 15 weeks ended January 7 grew by 0.8% year-on-year, as like-for-like retail sales rose by 0.1%, also excluding fuel.

At Argos, the general retailer that Sainsbury's bought last year, total sales increased by 4.1% and like-for-like sales were up 4.0%, driven by the Black Friday sales event and Christmas trading.

This means combined Sainsbury's and Argos saw like-for-like sales grow by 1.0% in the period.

Sainsbury's said it had a record Christmas week, with over 30 million customer transactions at Sainsbury's and over GBP1 billion of sales across the group. The stock closed up 3.4%, having been the top gainer in the FTSE 100 for most of the day.

Cobham ended as the worst performer in the mid-cap index, down 15%. The defence and aerospace technology group said it will scrap its final dividend as it warned profit for 2016 missed its guidance, despite having issued three profit warnings in the period.

Cobham said group trading profit for the year to December will be GBP245.0 million, below the guidance range of GBP255.0 million to GBP275.0 million that it provided in October.

The company said its management team is starting a balance-sheet review, including looking at major contracts and carrying values. The profit guidance it provided on Wednesday is before any adjustments this review may require.

Recruitment firm PageGroup said it increased gross profit over 2016 and expects operating profit to be towards the top end of market forecasts.

The 2016 performance was aided by a strong fourth quarter, generating gross profit of GBP163.4 million, a 20% increase from GBP135.8 million in the same quarter in 2015, a 3.8% increase in constant currency.

This came despite a 6.7% slump in UK gross profit in the quarter, dropping to GBP33.8 million from GBP36.2 million. Over 2016, PageGroup's UK profit was down 3.5% at GBP146.3 million from GBP151.6 million. The company said the UK performance was hit by "uncertain market conditions".

The company was one of the best performers in the FTSE 250, up 4.1%.

Retailer Ted Baker, up 3.6%, reported sales growth in the recent holiday season, adding it will end the year with a clean stock position and its gross margins remain on track.

The fashion firm, which sells clothing and runs grooming salons, consistently reported growing sales in 2016 as it shrugged off issues that have hampered others in the luxury goods industry.

Retail sales grew 18% year-on-year in the eight weeks to January 7 and by 11% in constant currencies. Online sales rose 35% year-on-year, and the group added 8.5% to its overall trading space.

Brent crude overturned the losses it made after the US Energy Information Administration said its crude oil stock rose by more-than-expected. The EIA said its oil inventory increased by 4.1 million barrels in the week ending January 6, ahead of the expected build-up of 1.2 million barrels.

At the end of London equity trade, Brent crude traded at USD54.90 a barrel, having dropped as low as USD53.71 after the EIA data. At the close on Tuesday, Brent traded at USD54.36 a barrel.

Still ahead in the economic calendar, Japanese trade balances and bank lending figures are at 2350 GMT. On Thursday, French consumer price index is at 0745 GMT and eurozone industrial production is at 1000 GMT.

Turning to Thursday, the minutes from the European Central Bank's December meeting are at 1230 GMT. In its last meeting, the ECB, surprised the market by easing the pace of its monthly asset purchases but extending the end date of the programme to December 2017.

In the afternoon, US initial and continuing jobless claims are at 1330 GMT, as are US import and export price index.

It is a busy day for retailers in the UK corporate calendar. There are trading updates from Marks & Spencer Group, Tesco, Primark-owner Associated British Foods, Dunelm Group, JD Sports Fashion, Debenhams, ASOS, Mothercare, Moss Bros, McColl's Retail Group and SuperGroup also releases interim results.

Elsewhere, there are trading updates from housebuilder Barratt Developments, Premier Oil, recruiter Hays, wealth manager Rathbone Brothers, payments processing company PaySafe and Jupiter Fund Management.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Ted Baker PLC 2,760.00 GBX 0.00 -
PageGroup PLC 461.90 GBX 0.37 -
Sainsbury (J) PLC 247.70 GBX 1.68
Cobham PLC 142.70 GBX 0.00
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