13th Jan 2016 17:15
LONDON (Alliance News) - Stocks in London ended broadly higher Wednesday, as weak US crude oil stock data led to further pressure on the price of oil, weighing on the strong gains seen earlier in the session after better-than-expected data from China.
The FTSE 100 index ended up 0.5% at 5,960.97 points, the FTSE 250 up 0.1% at 16,695.77 and the AIM All-Share down 0.3% at 718.65. In Europe, the French CAC 40 closed up 0.3% and the German DAX 30 down 0.3%.
Chinese economic data released before the London open provided a positive surprise. The data showed that the country's trade surplus increased in December, as exports dropped at a slower-than-expected pace, raising hopes that the depreciation of the yuan is unlikely to continue on its previous trajectory.
Exports fell 1.4% on a yearly basis in December, data published by the General Administration of Customs revealed Wednesday. It was slower than the 8% decline expected by economists and a 6.8% decrease posted in November. At the same time, imports slid 7.6%, also slower than the expected decrease of 11%.
The Chinese trade surplus rose to around USD60 billion, taking the full-year surplus to USD594.5 billion. The December figure was well above a USD51.3 billion surplus forecast by economists.
In yuan terms, exports advanced 2.3%, reversing a 3.7% drop in November. Imports slid at a slower pace of 4% after falling 5.6% a month ago.
Despite the better-than-expected data, stocks in Asia closed mixed. The Shanghai Composite index closed down 2.4%. However, the Nikkei 225 index in Tokyo finished up 2.9%, and the Hang Seng in Hong Kong up 1.1%.
The positive Chinese trade figures helped FTSE 100 miners end in the green, with Rio Tinto up 5.0%, Glencore up 3.2% and Antofagasta up 0.6%.
Shares in New York opened strongly but were giving back early gains at the London close. The Dow 30 was down 0.5%, the S&P 500 up 0.4%, and the Nasdaq Composite down 0.8%.
The boost to investor confidence from the Chinese data was hit by the release of data showing that US crude oil stocks rose by much less than expected, sending Brent to a new 11-year low.
The data from the US Energy Information Administration showed that crude stockpiles in the US rose by 234,000 barrels in the week ended January 8, well below the 2.5 million barrel increase that was expected by economists.
Brent oil dropped heavily after the data, quoted at USD30.62 a barrel at the London close, having hit a new low of USD30.31 a barrel. Similarly, WTI was quoted at USD30.67 a barrel, having surpassed the USD30 line overnight, touching USD29.92 a barrel.
However, oil-related stocks in London shrugged off the decline in crude prices, with Royal Dutch Shell 'A' shares ending up 1.5%, while BP added 3.1% and BG Group up 1.7%.
Meanwhile, Christmas trading updates from grocer J Sainsbury, fashion retailer Ted Baker and homewares retailer Dunelm Group grabbed market attention.
Sainsbury's released better-than-expected sales figures for the third quarter, covering the festive season, though some analysts were left disappointed by the lack of clarity provided on its pursuit of Argos and Homebase owner Home Retail Group.
The grocer has until February 2 to either make a firm offer for the company or walk away, under UK takeover rules, and is currently considering its position.
The Sunday Times reported on Monday that three big Home Retail shareholders have demanded more than GBP1.6 billion for the business from Sainsbury's, with the first offer thought to have valued Home Retail at GBP1.1 billion. Home Retail Group, up 4.1%, will release a trading statement on Thursday.
Sainsbury's reported growth in total retail sales excluding fuel in its third quarter as the number of customer transactions rose, although like-for-like sales fell. Total retail sales in the 15 weeks ended January 9 grew 0.8% excluding fuel, although they fell 0.7% including fuel.
Like-for-like retail sales, meanwhile, declined 0.4% excluding fuel and 1.8% including fuel. Sainsbury's added that over 30 million customer transactions were made in the week before Christmas, which was up 2.6% year-on-year.
Shares in Sainsbury's ended down 0.1%. The stock had gained 3.2% on Tuesday, after topping the Kantar Worldpanel UK grocery market survey.
In the FTSE 250, Ted Baker closed down 0.2% even as the high-end fashion retailer reported an increase in retail sales in its eight-week Christmas period and said it expects full-year results to be in line with its expectations.
The fashion company said retail sales in the eight weeks to January 9 grew 10% year-on-year. Gross margins were in line with expectations, and there was no significant promotional activity before Christmas, Ted Baker said, adding that it expects to end the year with a clean stock position.
Cantor Fitzgerald retained a Buy recommendation on Ted Baker following the update, though the broker said it came in marginally below its estimates, "probably because figures were impacted by the mild weather in the UK."
Dunelm Group dropped 2.9% after reporting sales growth in the first half of its financial year, boosted by an extra six days in its winter sale, but warned the positive like-for-like trend is set to reverse in the current quarter.
The homewares retailer said total sales in the 26 weeks ended January 2 grew 10% to GBP448.1 million year-on-year, growing 8.8% to GBP245.7 million in the 13 weeks to the same date. Like-for-like sales rose 4.6% to GBP404.9 million in the 26 weeks and 3.9% to GBP221.5 million in the 13-week period.
Meanwhile, Sports Direct International ended up 2.1%. The FTSE 100 sports clothing and equipment retailer said it holds an indirect interest representing 11.5% of the issued share capital of Iconix Brand Group and 2.3% of Dick's Sporting Goods.
Iconix is a brand management company which owns a portfolio of consumer brands across fashion, sports, entertainment and home. Dick's is a sporting goods and sports clothing retailer.
Shares in Sports Direct were still down 18% since Friday last week, following a profit warning in which the company said it had been hit by deteriorating conditions on the UK high street and the effect of the mild winter weather, leaving the stock in danger of demotion from the FTSE 100.
Shares in pharmaceutical giant Shire ended up 3.6%, recovering most of the ground lost after it announced on Monday its much anticipated agreement for US-based Baxalta.
The most significant event in the economic calendar Thursday is the release of the Bank of England's monetary policy decision, due at 1200 GMT. The BoE is widely expected to keep UK interest rates at their current record low level and analysts foresee a number of obstacles in the bank's path before a rate hike can even be considered.
The bank faces numerous risks and uncertainties which could see caution among members of the Monetary Policy Committee as they decide whether to lift the BoE's bank rate from 0.5%. These risks include the deflationary pressure from the further falls in already-low oil prices, the recent China-triggered turmoil in stock markets and commodities, and the diverging policies of the US Federal Reserve and European Central Bank.
At 1230 GMT, the ECB releases the monetary policy meeting accounts from its last meeting. In the US, initial and continuing jobless claims data are due at 1330 GMT, while EIA Natural gas storage data are expected at 1530 GMT. At 1330 GMT, James Bullard, the president of the Federal Reserve Bank of St Louis gives a speech in Memphis before the Economic Club of Memphis.
Also in the corporate calendar, Tesco, Burberry Group, Associated British Foods, SuperGroup, JD Sports Fashion, Hilton Food Group, Booker Group, Mothercare, Restaurant Group, Moss Bros Group, ASOS and Ashmore Group issue trading Statements.
By Daniel Ruiz; [email protected]
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