London midday: Stocks nudge up as strong miners offset weak retailers, housebuilders

Thu 11 Jan 2018

LONDON (SHARECAST) - (ShareCast News) - London stocks had nudged a little higher by midday on Thursday as strength in the heavily-weighted mining sector helped to offset weak retailers and housebuilders following uninspiring updates from Tesco, Marks & Spencer and Barratt Developments.
The FTSE 100 was up 0.1% to 7,753.95, having hit a record intraday high of 7,763.49 earlier, while the pound was down 0.2% against the euro at 1.1279 and 0.3% lower versus the greenback at 1.3473.

Earlier, 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".

After a report from Bloomberg on Wednesday that China was looking to scale back US bond purchases, a spokesperson for Beijing's State Administration of Foreign Exchange said in a statement that the "news may quote the wrong source of information, or it may be fakes news".

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 numbers were much worse, with UK like-for-like sales down 1.4%. Over the 13 weeks to 30 December, M&S food LFL sales fell 0.4% in 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 down a whopping 18% despite what it called a "solid" Christmas trading period. It 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%.

It wasn't all bad news though, with online electrical retailer AO World rallying after posting an 11% jump in revenue in the final three months of last year.

Outside the FTSE 350, meanwhile, shares in fast fashion brand Boohoo reversed earlier losses to trade higher after it upgraded its full-year forecasts and posted a doubling of its revenues for the four months to the end of December.

Away from the retail sector, 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.

IG analyst Chris Beauchamp said Barratt's "protestations about how things have much improved over the past five years cut little ice with a market that is forward-looking, and already the models are being downgraded to anticipate weaker growth in the year ahead".

"It continues to be a starkly mixed bag for retailers, with Marks & Spencer and Tesco sinking fast. Both these UK stalwarts have given investors reason to worry, although Tesco is perhaps more at fault for not being more conservative on guidance. For M&S however, the picture goes from bad to worse. Everyone seems to have abandoned their Simply Food stores for other supermarkets, removing the one real positive in the numbers over the last few years."

Elsewhere, Ultra Electronics surged after saying it sees "significant exposure to the strengthening US defence budget", while outsourcer Bunzl rose after saying it expects US tax changes to have a positive impact from this year and announcing acquisitions in the UK and the US.

FTSE 250 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 was higher as it said it now 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.

In broker note action, Just Eat was boosted by an upgrade at Barclays, while Anglo American was up after an upgrade by Morgan Stanley. Greene King and Metro Bank were hit by downgrades from Numis and Investec, respectively.

Market Movers

FTSE 100 (UKX) 7,753.95 0.07%
FTSE 250 (MCX) 20,727.29 -0.16%
techMARK (TASX) 3,516.09 0.19%

FTSE 100 - Risers

Just Eat (JE.) 813.60p 5.99%
Anglo American (AAL) 1,749.20p 2.87%
Bunzl (BNZL) 2,056.00p 2.54%
British American Tobacco (BATS) 5,065.00p 2.01%
Ashtead Group (AHT) 2,093.00p 1.95%
BHP Billiton (BLT) 1,624.20p 1.55%
Rio Tinto (RIO) 4,150.58p 1.51%
SSE (SSE) 1,324.50p 1.49%
National Grid (NG.) 850.30p 1.41%
BAE Systems (BA.) 585.60p 1.35%

FTSE 100 - Fallers

Marks & Spencer Group (MKS) 303.08p -6.46%
Tesco (TSCO) 202.80p -4.29%
Barratt Developments (BDEV) 617.00p -2.71%
London Stock Exchange Group (LSE) 3,633.00p -1.81%
Barclays (BARC) 197.88p -1.65%
Sainsbury (J) (SBRY) 250.00p -1.54%
Taylor Wimpey (TW.) 197.25p -1.47%
Berkeley Group Holdings (The) (BKG) 4,159.00p -1.33%
Persimmon (PSN) 2,638.00p -1.31%
Next (NXT) 4,978.00p -1.23%

FTSE 250 - Risers

Ultra Electronics Holdings (ULE) 1,480.00p 18.78%
Grafton Group Units (GFTU) 795.00p 4.61%
Ferrexpo (FXPO) 312.90p 4.33%
Hays (HAS) 194.80p 3.45%
CLS Holdings (CLI) 241.28p 2.67%
Cairn Energy (CNE) 232.40p 2.65%
TBC Bank Group (TBCG) 1,714.00p 2.51%
Cobham (COB) 126.55p 2.43%
William Hill (WMH) 338.60p 1.93%
Evraz (EVR) 381.40p 1.71%

FTSE 250 - Fallers

Card Factory (CARD) 230.35p -18.43%
Greene King (GNK) 520.95p -6.94%
Booker Group (BOK) 224.70p -3.52%
TalkTalk Telecom Group (TALK) 131.81p -3.22%
Mitchells & Butlers (MAB) 261.00p -3.19%
Brewin Dolphin Holdings (BRW) 376.60p -3.14%
Ted Baker (TED) 3,022.00p -3.08%
WH Smith (SMWH) 2,162.00p -2.96%
Metro Bank (MTRO) 3,596.00p -2.81%
Weir Group (WEIR) 2,196.00p -2.66%
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