13th Jan 2016 08:39
LONDON (Alliance News) - Upbeat Chinese trade data helped London stocks continue their positive momentum Wednesday, as investors focused on Christmas trading updates from grocer J Sainsbury, fashion retailer Ted Baker and homewares retailer Dunelm Group.
The FTSE 100 index traded up 0.8% at 5,973.80 points, the FTSE 250 was up 0.3% at 16,740.03 and the AIM All-Share index up 0.1% at 721.58. In Europe, the CAC 40 in Paris was up 1.3% and the DAX 30 in Frankfurt up 1.4%.
Stocks were higher around Europe after Chinese export data provided a positive surprise for the market, declining by much less than expected.
China's trade surplus increased in December, as exports dropped at a slower-than-expected pace, raising hopes that the depreciation in 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 an 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.
However, despite the better-than-expected results, the Shanghai Composite closed down 2.4%. Other stock indices in Asia ended higher, with the Nikkei 225 index in Tokyo closing up 2.9% and the Hang Seng in Hong Kong up 1.1%.
"Improved Chinese import and export contraction has given a lift to Asian equities from three-year lows, although interestingly, Chinese bourses are in the red. Could it be that even they are sceptical of official data with year-end bookkeeping a likely reason for the upside surprise? China worries still prevalent, unlikely to go away any time soon," said Mike van Dulken and Augustin Eden of Accendo Markets
The positive data saw miners in the FTSE 100 trade amongst the best performers with Anglo American up 2.7%, Rio Tinto up 1.9% and Antofagasta up 1.7%.
Oil companies also were higher after oil prices saw some recovery from their Tuesday lows. Brent oil was quoted at USD31.36 a barrel early Wednesday compared to USD30.67 at the London equity market close on Tuesday and the low of USD30.36.
In the FTSE 100, BP was up 2.5%, Royal Dutch Shell 'B' up 2.0% and BG Group up 1.8%.
Meanwhile, Sainsbury's started lower but quickly recovered to be about flat, despite reporting growth in total retail sales excluding fuel in its third quarter as the number of customer transactions rose, although like-for-like sales fell.
The supermarket chain said 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.
It said reduced levels of vouchering, promotional activity, and number of multi-buys, in favour of lower regular prices, drove like-for-like transaction and volume growth.
The stock traded down more than 1.0% at the open, but then recovered to be up 0.2%.
Dunelm's trading update received a more emphatically negative reception from investors, making it the worst performer in the FTSE 250, down 5.1%. The homewares retailer reported growth in sales in the first half of its financial year as it benefited from an extra six days in its winter sale, but warned the positive like-for-like trend would reverse in the current quarter.
Dunelm said the current year included eight days of winter sale, compared with the prior year which only had two days of winter sale, which helped to boost like-for-like growth. This will reverse in the current quarter, it warned.
Ted Baker's update was the most positively received, after it reported a rise in retail sales in its eight-week Christmas period and said it expects full-year results to be in line with its expectations.
The high-end fashion retailer 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.
Ted Baker was one of the best performers in the FTSE 250, up 7.0%.
In the AIM All-Share, Independent Oil & Gas shares were down 51% after the company made a decision to delay its plans for the Skipper appraisal well in the UK North Sea, meaning it will have to secure an extension to the licence and an agreement with its lenders.
"Whilst it has been a very difficult decision, it has undoubtedly become prudent to postpone the Skipper appraisal well given the significant further oil market weakness in recent weeks, as well as unsettled weather conditions in the North Sea," said Chief Executive Mark Routh.
Still ahead in the economic calendar is eurozone industrial production at 1000 GMT before US MBA mortgage applications are at 1200 GMT. Later in the afternoon, the US Energy Information Administration's crude oil stocks are at 1530 GMT, and the US monthly budget statement is after the London close at 1900 GMT.
By Neil Thakrar; [email protected]; @NeilThakrar1
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