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| | London Market Report |  | | FTSE 100 | Euronext | Dax perf | CAC 40 |  |  |  |  | | Please click on the images to view our interactive charts | | | London close: Retailers provide a lift as inflation data boosts economic hopes UK stocks put in decent gains on Tuesday as a sharper-than-expected slowdown in inflation boosted hopes for consumer spending and pushed back projections for the first rate raise.
A strong start to corporate earnings season in the States and increased hopes for further stimulus by the European Central Bank were also driving sentiment.
Retailers were among the best performers of the session, with updates from the likes of Wm Morrison, Greggs and ASOS impressing investors, outweighing weakness in the resource sectors.
The FTSE 100 finished up 0.6% at 6,542.
"After a lacklustre start to the week stock markets have found their footing, aided by decent results from Alcoa that have kicked off US earnings season in good form and a revival of expectations that ECB easing is on its way," said analyst Chris Beauchamp from IG.
Markets extended gains mid-morning after government data showed that the annual rate of UK consumer price inflation slowed to just 0.5% in December from 1% the month before due to the recent collapse in oil prices. This was the lowest level since May 2000 and well below analysts' forecasts of a slowdown to 0.7%.
Economist Azad Zangana from Schroders said while low inflation would normally be seen as a sign of economic weakness, low oil prices are likely to boost consumer spending and raise growth prospects for 2015. "As a result, we do not expect the Bank of England to consider easing monetary policy at all in the near future," he said.
Morrisons jumps after CEO pushed
The share price of supermarket group Wm Morrison jumped 4.5% following the news that chief executive Dalton Philips has been axed after the company delivered the worst Christmas performance of the Big Four.
Like-for-like sales excluding fuel fell 3.1% in the six weeks to 4 January; although this was not quite as bad as the 3.8% decline analysts had predicted, it was far in excess of the declines seen at rivals Tesco and Sainsbury's.
Industry data from Kantar also showed that increased consumer spending over Christmas helped the grocery market grow at its fastest rate since August 2014 with Sainsbury's performing the best out of the Big Four. Sainsbury's and Tesco were both rising nearly 4%.
Also in the retail sector, ASOS surged after reporting a 15% rise in retail sales over Christmas, driven by a 27% jump in sales in the UK. Broker Shore Capital said the growth in its domestic market will encourage investors following a tough 2014, which saw its share price plummet significantly.
A very strong post-Christmas update from sausage-rolls-and-sandwiches retailer Greggs led management to boast that full-year results will beat current expectations, causing the stock to sizzle. Christmas LFL sales were up 8.2%.
Bucking the trend was Debenhams whose shares dropped after the high street department store revealed that full-year margins will be at the lower end of guidance despite a record sales performance over Christmas.
Oil and gas stocks remained under pressure after Brent crude settled below the $50-a-barrel mark for the first time in almost six years on Monday. Tullow was a heavy faller as Brent fell a further 2.6% to $46.19 a barrel.
Others in the resource sectors such as Antofagasta, Glencore and Kaz Minerals were falling heavily as copper prices dropped to their lowest since October 2009. |
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| | Market Movers
techMARK 2,993.36 +0.10%
FTSE 100 6,542.20 +0.63%
FTSE 250 16,084.97 +0.89%
FTSE 100 - Risers
Admiral Group (ADM) 1,432.00p +4.68%
Morrison (Wm) Supermarkets (MRW) 184.80p +4.47%
International Consolidated Airlines Group SA (CDI) (IAG) 489.10p +4.22%
Centrica (CNA) 271.80p +4.14%
Tesco (TSCO) 212.00p +3.64%
Sainsbury (J) (SBRY) 249.00p +3.62%
ITV (ITV) 219.90p +3.48%
Marks & Spencer Group (MKS) 463.00p +3.28%
London Stock Exchange Group (LSE) 2,258.00p +2.96%
BG Group (BG.) 823.40p +2.92%
FTSE 100 - Fallers
Tullow Oil (TLW) 368.90p -4.65%
Glencore (GLEN) 268.95p -3.76%
Ashtead Group (AHT) 1,084.00p -2.95%
Shire Plc (SHP) 4,568.00p -2.83%
Antofagasta (ANTO) 709.00p -2.54%
Weir Group (WEIR) 1,692.00p -1.80%
Smith & Nephew (SN.) 1,159.00p -1.78%
Intertek Group (ITRK) 2,363.00p -1.25%
ARM Holdings (ARM) 990.00p -0.80%
United Utilities Group (UU.) 943.00p -0.74%
FTSE 250 - Risers
Greggs (GRG) 820.50p +9.47%
Tullett Prebon (TLPR) 311.20p +8.06%
Michael Page International (MPI) 453.30p +6.28%
Supergroup (SGP) 811.50p +5.53%
Drax Group (DRX) 374.80p +5.28%
Brown (N.) Group (BWNG) 407.50p +5.19%
Vesuvius (VSVS) 454.20p +4.29%
Computacenter (CCC) 618.50p +4.04%
Wetherspoon (J.D.) (JDW) 835.00p +3.99%
SIG (SHI) 168.50p +3.82%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 230.50p -8.75%
Debenhams (DEB) 70.00p -6.73%
Afren (AFR) 25.89p -5.20%
Entertainment One Limited (ETO) 297.20p -4.44%
Bank of Georgia Holdings (BGEO) 2,001.00p -4.12%
Cobham (COB) 317.50p -4.08%
Betfair Group (BET) 1,484.00p -3.51%
Brit (BRIT) 257.40p -3.23%
Lonmin (LMI) 165.00p -2.94%
Fisher (James) & Sons (FSJ) 1,077.00p -2.80% |
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| | Europe Market Report | | | | FTSE 100 | Euronext | Dax perf | CAC 40 |  | | | | | | Europe close: Stocks gain as UK inflation slows more than estimated European stocks were in positive territory as data showed UK inflation eased more than expected.
The UK consumer price index rose 0.5% year-on-year, compared to expectations of 0.7% and the previous month's 1%, the Office for National Statistics revealed.
The Bank of England is targeting inflation of 2%, which means governor Mark Carney will have to write his first explanatory letter to the chancellor detailing why inflation has missed the goal.
"Disinflationary pressures look set to continue in the first half of 2015," said Scott Corfe, head of UK macroeconomics at Centre for Economics and Business Research.
"Retailers are still in a phase of intense competition, petrol prices should fall back further in the first half of the year and utility companies are likely to cut prices given developments in wholesale markets."
In China, the trade surplus narrowed by around $5bn to $49.61bn in December, from $54.47bn in November, slightly above forecasts of $49bn.
Exports from the People's Republic jumped 9.7% in the month, higher than the 6% rise estimated by analysts, with imports dropping by a much smaller 2.4% than the expected 6.2% fall.
Meanwhile, oil prices dropped 3% to $46.02 per barrel, according to the ICE, weighing on energy stocks including Royal Dutch Shell and Total SA.
Retailers rally
Morrisons gained after the grocer said it will start a search for a new chief executive officer to replace Dalton Philips.
Tesco and Sainsbury also advanced after positive industry data from Kantar surrounding Christmas sales.
Royal Philips declined after the lighting manufacturer said production delays at a facility in Cleveland will impact earnings more than previously estimate.
Sika AG was a high riser after the adhesives maker reported an increase in full-year sales on growth in emerging markets.
Geberit AG dropped after reporting a 2.9% increase in fourth-quarter sales growth adjusted for currency effects, missing analysts' forecasts of 4.2%.
Metro edged higher as the operator of Germany's Kaufhof department stores posted increase in first-quarter adjusted revenue. |
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| | US Market Report | | US open: Stocks rebound as oil slide puts monetary policy in focus US markets were rising on Tuesday despite another slide in oil prices, as sentiment was buoyed by hopes of continued loose monetary policy worldwide.
Early in the day the Dow Jones Industrial Average rose 1.25% to 17,860.73, the S&P 500 increased 1.07% to 2,050.03 and Nasdaq soared 1.38% to 4,227.38.
Ahead of the opening bell, market analyst Jasper Lawler from CMC Markets said: "Crashing oil prices led to lower stocks on Monday but US markets are set for a higher open on Tuesday after data showing a 14-year low in UK inflation adds to the mounting pile of evidence that global stock markets may still have plenty of time left to benefit from zero-bound interest rates.
Oil prices were under continued pressure with WTI crude down 1.7% at $45.31 a barrel and Brent 3.1% lower at $46.02 a barrel.
With oil prices now trading close to a six-year low and inflation running at multi-year lows across the globe, forecasts for the first interest-rate rise by the Federal Reserve have been pushed back. Data on Friday is expected to show that consumer prices in the States rose at an annual rate of just 0.7% in December, compared with 1.3% in November.
Meanwhile, the European Central Bank is also widely expected to implement quantitative easing next week to battle deflation in the Eurozone.
Craig Erlam from Alpari noted: "You get the impression that the only way OPEC would be willing to discuss production cuts at this stage is if similar cuts were agreed by the US shale companies. Given the debt levels of these companies and their costs, I would not be surprised if this happened in the coming months.
"Until that happens, oil prices could continue to push lower which means inflation in many countries will also continue to head south. The UK is one of those countries that has seen inflation fall rapidly, largely thanks to the fall in oil prices."
Over on COMEX, gold futures were advancing 0.25% to $1,235.90 while the dollar was sliding against the pound, the yen and the euro.
The yield on a benchmark US 10-year Treasury rose three basis points to 1.94%.
In the corporate world Apple was rising over 2% amid news it set Mac sales records for the second quarter in a row. |
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| | Broker Tips | | Broker tips: Wm Morrison, Smith & Nephew, Debenhams Markets may have reacted positively after Wm Morrison's agreed to part company with chief executive Dalton Philips alongside a small improvement in sales trends, but Shore Capital remains unconvinced.
The broker kept a 'hold' rating on the stock, saying: "The improving trend revealed for the Christmas 2014 trading period is much needed, albeit appears to be as much about favourable multi-year comparatives rather than any notable advancement in underlying trading in our view."
The M&A premium at Smith & Nephew has now been "baked in" to the share price, according to UBS which downgraded the medical equipment group from 'buy' to 'neutral' on Tuesday.
While the bank said it sees the possibility of a 1,300p take-out bid from a potential bidder, the company is valued on a standalone basis at 1,050p. UBS has set its target for the shares at the mid-point of 1,175p, raised from 1,100p previously, but this represents no upside after recent gains.
Shares in Debenhams tanked on Tuesday after the department-store chain disappointed with its festive trading update, with Investec adding to the downward pressure by cutting its rating from 'hold' to 'sell'. | | |
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