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Monday 23 July 2018

Retail pain and stronger pound weighs on London’s blue chip index

B&Q owner Kingfisher was among a series of retailers to release a dismal earnings report.

Retailers made a series of disappointing announcements on Wednesday (PA)
Retailers made a series of disappointing announcements on Wednesday (PA)

By Kalyeena Makortoff, Press Association City Correspondent

The FTSE 100 dipped into the red on Wednesday, as a stronger pound compounded pain from a drop in retail stocks following a string of store closures and profit warnings at some of the UK’s biggest chains.

London’s blue chip index ended the day down 0.3% or 22.3 points at 7,038.97 points, with Kingfisher taking the bottom spot.

The B&Q owner, which slipped 36.1p to 301.6p, was among a series of retailers to release a dismal earnings report, as it detailed a 10% drop in profits and warned the outlook for its UK business was uncertain following a recent hit to sales.

Away from the top tier, Moss Bros plunged more than 23% or 13.6p to 45p after warning profits would be “materially lower” than previously forecast, after suffering stock shortages, low footfall and sluggish demand for suit hire.

Fiona Cincotta, a senior market analyst at City Index, said: “Retailers dominated the lower reaches of the FTSE as harsh winds continue to blow down the UK high street.”

Spending on non-essential items could be on the cusp of spinning around, which would offer some respite to embattled retailers. Fiona Cincotta, Senior Market Analyst at City Index

But Miss Cincotta said  data released by the Office for National Statistics (ONS) – which showed a further rise in employment and a 2.8% rise in average earnings in the year to January – gave hope for some relief on the UK high street.

“UK wages increased in January at a faster rate than prices rose in February, should this pattern continue then as from this month, the consumer should no longer be experiencing a wage drop in real terms.

“This means that spending on non-essential items could be on the cusp of spinning around, which would offer some respite to embattled retailers. Although for some, such as Mothercare, Carpetright this could be too late.”

The wagegrowth data supported the pound which was up 0.5% against the US dollar at 1.407, and 0.3% versus the euro at 1.147.

Across Europe, with the French Cac 40 down more than 0.2% while the German Dax was flat.

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Brent crude prices rose amid a drop in US oil inventories (PA)

Brent crude prices surged 2.3% to around 69.12 US dollars per barrel as investors reacted to data from the Energy Information Administration data showing a drop in US oil inventories, which were expected to rise.

In UK stocks, GVC Holdings rose 11p to 945p and Ladbrokes Coral Group edged higher by 0.25p to 173.25p after the Competition and Markets Authority (CMA) gave the all-clear for a £4 billion tie-up between the two firms.

Carpetright shares edged higher by 0.4p to 41p after the embattled firm drew up sweeping restructuring plans which will see it close poorly performing stores and push through an equity issue of between £40 million and £60 million to fund plans to reboot the business and drive down debt.

Shares in Interserve soared nearly 26% or 18p to 87.9p after the outsourcer received a lifeline from its lenders that will put the troubled firm on a more secure financial footing.

The biggest risers on the FTSE 100 were Evraz up 14p at 432.3p, Antofagasta up 27.2p at 971.8p, London Stock Exchange Group up 114p at 4,150p, and Anglo American up 34.4p at 1,740p.

The biggest fallers on the FTSE 100 were Kingfisher down 36.1p at 301.6p, WPP down 36p at 1,110p, Associated British Foods down 77p at 2,417p, and Whitbread down 114p at 3,697p.

Press Association

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