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FTSE 100 lifted by strong rise in retail sales

Published 17/11/2016

The FTSE 100 Index closed up 44.99 points to 6,794.71 on Thursday
The FTSE 100 Index closed up 44.99 points to 6,794.71 on Thursday

Strong retail sales lifted the London market despite Royal Mail shares taking a dive on tumbling earnings.

The FTSE 100 Index closed up 44.99 points to 6,794.71, after October's retail sales rose at their strongest yearly rate in more than a decade.

The Office for National Statistics said strong winter clothes sales and a bumper Halloween for the supermarkets saw sales climb 7.4% compared to October 2015 - the fastest year-on-year growth since April 2002.

However, Royal Mail sat at the top of the biggest fallers, down 7%, after posting a fall in half-year earnings.

The group said uncertainty surrounding the referendum saw marketing activity reined in across the UK, with revenues from advertising mail down 8% in its first half.

This contributed to an 11% tumble in underlying earnings across its letters and parcels business, to £247 million in the six months to September 25. Shares were off 34.9p to 464p.

Across Europe, Germany's Dax was up 0.2%, while the Cac 40 in France rose 0.6%.

On the currency markets, the pound was 0.1% higher against the US dollar at 1.245 and grew 0.3% versus the euro at 1.168.

Sterling ticked up to 1.25 US dollars on the back of October's retail sales, but pared gains in afternoon trading.

Richard Wiltshire, chief FX broker at ETX Capital, said the pound's failure to remain above 1.25 US dollars suggests Brexit uncertainty lingers and that the pound remains "inherently quite weak".

The price of oil stepped up 0.5% to 46.84 US dollars a barrel amid growing optimism that the Opec cartel will succeed in striking a deal to curb output at a meeting on November 30.

In UK stocks, housebuilders were racing ahead, with Barratt Developments rebounding from a slump in the previous session.

Barratt dropped nearly 3% on Wednesday after warning of a slowdown in the London property market, but bounced in Thursday's session to trade up 4% or 235p to 6,085p.

Shares in Persimmon and Taylor Wimpey also rose 16.5p to 486p and 3.6p to 152.1p respectively.

Away from the top tier, Virgin Money dropped more than 6% after American billionaire Wilbur Ross offloaded his remaining 12% stake in the lender for £171.5 million.

It was almost double the shares his private equity firm WL Ross & Co had previously planned to sell, having gradually reduced its stake since 2014.

Shares were down 21.8p to 316.7p.

Meanwhile, Majestic Wine rose nearly 5% as it swung to a loss, but cheered a 10.6% rise in underlying sales growth at £205.6 million.

The warehouse wine retailer first issued a profit warning in September after taking a hit from a failed marketing campaign for its Naked Wines business in America and weak sales to business customers.

The £4.4 million loss for the six months to September 26 compares with a bottom-line pre-tax profit of £4.3 million a year earlier.

Shares were up 14.3p to 316p.

The biggest risers on the FTSE 100 Index were Randgold Resources up 235p to 6,085p, Barratt Developments up 16.5p to 486p, Mondi up 47p to 1,558p, BT up 11.3p to 373.4p.

The biggest fallers on the FTSE 100 Index were Royal Mail down 34.9p to 464p, Rolls Royce down 39.5p to 699p, Hikma Pharmaceuticals down 69p to 1,664p, Johnson Matthey down 108p to 3,227p.

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