11th Feb 2014 10:48
LONDON (Alliance News) - UK stock indices have made strong gains Tuesday morning, led higher by the mining and retail stocks, on the back of rising precious metal prices and strong bumper retail sales data. Meanwhile Barclays leads the blue chip fallers after reporting its full-year results.
By mid-morning Tuesday the FTSE 100 is up 1.0% at 6,657.30, the FTSE 250 is up 0.9% at 16,045.75, and the AIM All-Share is up 0.3% at 868.16.
An unexpectedly strong report on UK retail sales has boosted retailers, with the FTSE 350 sector up 1.9%. The British Retail Consortium sales monitor recorded 3.9% year-on-year sales growth in January, smashing expectations of 0.8% and recording the strongest sales growth since March 2010.
On top of that, home furnishings retailer Dunelm Group confirmed that it has increased its interim dividend by 11% and said its half-year pretax profit is up 2.9%. Dunelm shares are up 2.0%.
Sports Direct International is the top FTSE 100 gainer, up 3.7%. Debenhams, over which Sports Direct has an outstanding option for 6.6% of the company, is also up 2.5%. Dixons Retail is up 3.3%, and Home Retail Group is up 2.8%.
Barclays is in focus again Tuesday. Having made headlines due to a data breach at the weekend and by pre-releasing its headline profit figure on Monday, the bank leads the FTSE 100 fallers Tuesday, down 3.9%, after reporting its full results. The headline profit was already known from Monday's announcement, but there has been some disappointment on cost cutting, according to analysts.
One cost-cutting measure that has been announced may prove controversial. The bank has said that it will cut 7,000 jobs this year, even as it increased its investment banking bonus pool by 10%.
The Industrial Metals sector is up 3.2%, and the Mining sector up 1.2%, boosted by firmer metals pricing and some positive news.
Kazakhmys shares have rocketed 25% to lead the FTSE 250 gainers after the National Bank of Kazakhstan effectively devalued its currency, the tenge. The central bank said Tuesday it would intervene in the forex market to support the tenge only at KZT185 to the US dollar - a 19% devaluation from Monday's rate. Analysts estimate 60% of Kazakhmys costs are generated domestically, in Kasakhstan.
Glencore Xstrata are modestly higher, up 0.4%, after the group said it increased production in 2013 across the majority of its portfolio of assets in a production report. Fresnillo and Randgold are both top gainers, up 2.8% and 2.6% respectively.
Gold has had a positive run in recent sessions, helped along by the cuts to the US monetary stimulus program and helped further by safe-haven flow Tuesday, ahead of US Federal Reserve Chair Janet Yellen's address to Congress later.
Gold is holding on to overnight gains against the dollar, currently trading at USD1,283.20.
Major European equity markets are also performing well, with the French CAC 40 up 0.7% and the German DAX 40 up 1.0%.
"A strong start to the week continues this morning, with the major European benchmarks in the green for the 5th day in a row before Fed Chair Janet Yellen takes centre stage this afternoon", said CMC Markets senior sales trader Toby Morris.
In the absence of any further economic data, major currency pair remain fairly subdued, with the dollar just a little softer across the board. Currently the pound trades at USD1.6430 and the euro trades at USD1.3670.
Still to come Tuesday, the US NFIB business optimism index at 1230 GMT, the US Redbook index at 1355 GMT and a speech from Philadelphia Fed Chief Charles Plosser.
The clear focus, however, remains Janet Yellen's appearance in front of Congress at 1500 GMT. The much anticipated testimony "could give investors valuable insight into how the Federal Reserve plans to approach tapering and interest rates over the next couple of years", said Spreadex.com financial sales trader Lee Mumford.
By Jon Darby; [email protected]; @jondarby100
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