10th Jan 2019 08:52
LONDON (Alliance News) - Stocks pulled back on Thursday morning from the previous session's gains, with London's retailers providing a mixed bag of Christmas updates for investors to ponder.Tesco was one of Thursday's winners after the grocer posted sales growth over the festive period, while shares in Halfords sank after the car parts and bikes seller blamed subdued consumer confidence as it cut its profit outlook. The FTSE 100 was down 26.13 points, or 0.4%, at 6,880.50, while the FTSE 250 was down 8.00 points at 18,405.71. The AIM All-Share was up 0.3% at 906.01.The Cboe UK 100 was down 0.6% at 11,677.83, while the Cboe UK 250 was 0.1% lower at 16,468.39 and the Cboe UK Small Companies flat at 11,141.67.In mainland Europe, the CAC 40 in Paris was down 0.8%, while the DAX 30 in Frankfurt was 0.7% lower.The lower open in Europe comes after "a slightly disappointing statement" from the US concerning trade talks with China, said Spreadex analyst Connor Campbell.After extending discussions into a third day on Wednesday, US and Chinese trade teams made some progress but questions remain over how they will overcome differences which have been fuelling an ongoing trade war.US officials called for any future agreement with their Chinese counterparts to be subject "to ongoing verification and effective enforcement," according to a statement released Thursday by the US trade representative. The demand reflects older complaints China doesn't always fulfil its trade-related promises."The right kind of noise, then, but not exactly the definitive signs of actual progress the markets were hoping for given their movements in the last few days. Add onto that lower-than-forecast inflation readings from China overnight, and Europe returned to a more familiar red environment after the bell," said Campbell. In Asia on Thursday, the Japanese Nikkei 225 index ended down 1.3%. In China, the Shanghai Composite closed down 0.4%, but the Hang Seng index in Hong Kong closed up 0.2%.Tesco was at the top of the FTSE 100, shares rising 2.3%, as it delivered a strong Christmas update."Tesco has defied the retail gloom and delivered a pick of the bunch performance," commented Richard Hunter, head of markets at Interactive Investor."Total sales are generally better, online sales are also improving and the company remains on track to give the European and Asian businesses the shot in the arm they require," said Hunter. "As such, the group's guidance is upbeat and the previously announced ambitions, such as the cost-savings targets, seem to be within comfortable reach."For the 19 weeks to January 5, Tesco's group like-for-like sales were up 0.8%, driven by a strong Christmas period, with sales up 1.5% in 6 weeks to January 5, and a steady third-quarter performance, up 0.5% in the 13 weeks to November 24. During the 19-week period, in the UK, where Tesco is the biggest supermarket by market share, like-for-like sales grew 1.2%. Chief Executive Officer Dave Lewis said: "As a team we have achieved a lot in the last 19 weeks. In the UK we delivered significant improvements in our competitive offer and this is reflected in a very strong Christmas performance which was ahead of the market."Marks & Spencer was down 1.0% as it reported a fall in Christmas sales across the board in what was described by the food, clothing and homewares retailer as a "steady" performance. Total sales were down 3.9% to GBP3.0 billion in the 13 weeks to December 29, with total UK sales down 2.7%. On a like-for-like basis, UK sales were down 2.2%, comprising a 2.1% fall in food sales and a 2.4% in clothing & home. Shares in BHP Group slumped 6.2% as the miner went ex-dividend, meaning new buyers no longer qualify for the firm's special payout.Luxury fashion retailer Burberry was down 3.4% after Berenberg cut its rating on the stock to Hold from Buy. "With Burberry entering a transition period amid a less-certain macro environment and its relative valuation 20% above its historical average we note more limited upside risk to the story in the coming year," commented the German bank.FTSE 250 constituent Halfords plummeted 22% after cutting its annual profit forecast, blaming weak consumer confidence. In the 14 weeks to January 4 - covering the Christmas trading period - sales were down 2.0%, with Retail sales down 2.5% and a 1.9% rise in Autocentres unable to offset this. On a like-for-like basis, group sales fell 1.7% in the period. Halfords said it now expects underlying pretax profit for its current financial year to be in the range of GBP58 million to GBP62 million and, further, said it expects profit for the year after to be "broadly flat" on this revised guidance on the possibility that consumer confidence remains weak.In November, Halfords said it expected profit for its 2019 financial year to be broadly flat on the GBP71.6 million achieved for the 2018 year. Card Factory fared little better, down 12% after delivering a "creditable" festive performance but warning the financial year ahead looks tough. For the eleven months to the end of December, sales were up 3.4% while like-for-like sales were down 0.1%. In the same period a year ago, like-for-like sales were up 3.0%. The greeting cards retailer said it expects the 2020 financial year will be another difficult one "in light of the current consumer and macro-economic backdrop", with earnings before interest, taxes, depreciation and amortisation to be broadly flat, based on limited sales growth.To come in the economic events calendar on Thursday is the Bank of England's credit conditions survey at 0930 GMT. In addition Federal Reserve Chair Jerome Powell will speak at the Economic Club of Washington at 1700 GMT.
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BurberryTescoMarks & SpencerHalfordsCard FactoryBHP Group