17th Jan 2014 17:01
LONDON (Alliance News) - UK stocks indices struggled to get off the ground Friday, although the FTSE 100 has gained more than 1% over the week, to close at nearly an 8-month high, buoyed by an upgrade to global growth forecasts. The pound has also regained ground against other major currencies Friday following a strong reading for UK retail sales.
The FTSE 100 has closed Friday up 0.2% at 6,829.30, the FTSE 250 has closed down 0.1% at 16,187.09 and the AIM All-Share has closed up 0.1% at 884.65.
In the major UK economic release Friday, UK retail sales increased by 5.3% year-on-year in December, accelerating from the 1.8% rise in November and outpacing economists expectations of 2.6% growth. On a monthly basis sales were up by 2.6%, beating expectations of just 0.4% and growing much faster than the 0.1% seen in November.
The numbers from the Office of National Statistics show the strongest monthly growth since 2004. The figures are also much stronger than those released earlier in the month from the British Retail Consortium, which covers just major high street chains, that reported sales growing at just 1.8% annually.
With consumers accounting for over 70% of UK GDP, the retail sales figures are a closely watched series and following a dearth of UK data in recent sessions the huge rise in sales over the December period sent the pound soaring more than a cent higher against both the dollar and the euro.
Having softened a little throughout the week, the pound now trades at USD1.6435 and EUR1.2120.
In the other major UK economic release earlier in the week, data showed inflation in the UK dropped to the government's 2.0% target for the first time in four years in December.
"Lower inflation and rising take-home pay, with increased levels of hours worked are combining to provide a robust backdrop for the UK consumer," says Shore Capital economic analyst Gerard Lane.
Within UK stock movers, min ers have outperformed once again, following a familiar theme for the week. Following the upgrade from the World Bank on Wednesday of its 2014 global growth forecast to 3.2% from 3.0%, the sector received an extra boost when Rio Tinto announced on Thursday that it produced 6% more iron ore in its fourth-quarter than the year previous.
Various broker upgrades followed and the FTSE 350 mining sector has gained more than 7% this week, outperforming the whole index by about 7 times. Rio Tinto has gained almost 7% over the week, Anglo American has gained close to 12%, Antofagasta and Fresnillo have gained about 8%, while BHP Billiton and Glencore have gained about 6%.
The stand out gainers on Friday were motor insurance companies on the back of results from a closely watched industry survey. The Towers Watson/Confused.com survey showed the decline in motor insurance pricing beginning to slow, with premiums in the first-quarter of 2013 decreased by only 0.1%, a slowdown from the 2.7% decline seen in the fourth-quarter of 2012 and the 5.1% decline in the third-quarter of 2012. Admiral Group ended the day as the top blue chip gainer, closing up 2.9%. The FTSE 250 was also topped by a fellow insurer, esure, closing up 6.1%
Royal Dutch Shell has proved a drag on the Oil & Gas sector on the other hand, weighing down the FTSE 100 Friday. The company shocked the market by warning that its profits will be well below expectations after nearly every part of its business performed below its expectations in the fourth quarter. Shell shares closed down 3.3% Friday.
Data releases from the US Friday have been mildly disappointing. US housing starts declined 9.8% in December, while building permits declined 3%, both worse than expected, although there were upward revisions to the November numbers for both.
The January preliminary reading of the Reuters/Michigan consumer Sentiment Index also disappointed, coming in at 80.4, dropping from the reading of 82.5 in December and lower than the 83.5 predicted by economists.
After the close of European equity markets, US markets are trading in a similar lacklustre fashion, taking little from the limp economic data. The DJIA is currently up 0.3% while the S&P500 and the Nazdaq Composite are both down 0.1%.
Monday promises a fairly quiet start to the week, with US markets closed for Martin Luther King's Day and only two released scheduled in the UK corporate calendar.
City of London Group will report interim results and InterneQ PLC will release a full-year trading statement.
In the Data calendar, fourth-quarter Chinese GDP numbers will likely provide the early market driver. The numbers are due for release before the UK market open along with Chinese industrial production and retails sales data. Otherwise Monday is empty of forecast market drivers, bar German producer price inflation data at 0700 GMT.
Good weekend all.
By Jon Darby; [email protected]; @jondarby100
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