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Market Wrap - Midday

FTSE flat on widening UK deficit

11 January 2017 11:46

Supermarket giant Sainsburys (SBRY) was the biggest blue chip gainer after strong sales growth at Argos, which it acquired for £1.3bn last year.

Chief executive Mike Coupe said it cut prices over the holiday period in the face of stiff competition from budget-friendly stores Aldi and Lidl, but provided no guidance on profit in the pre-close trading statement.

The FTSE 100 was flat at 7,283 as sterling continued its weak run against the dollar at $1.21.

ETX Capital analyst Neil Wilson said sterling slumped as the UK's trade deficit widened more than anticipated in November. The deficit on trade in goods and services was estimated to be £4.2bn in November 2016, which was £2.6bn more than October 2016.

The Office for National Statistics revealed that manufacturing production rose by 2.1% compared with October.

Wall Street had a quiet day as the S&P closed at 2,268 and the Dow Jones nudged lower to 19,855.

Hong Kong index Hang Seng was 0.8% higher at 22,935 and the SSE Composite index in Shanghai slumped 0.8% to 3,136.

West Texas Intermediate and Brent crude oil rallied 0.8% to $51.24 and $54 per barrel, respectively.

Gold was 0.3% higher at $1,187 per ounce and copper was stable at $5,732 per tonne.

FTSE 100 RISERS AND FALLERS

Thomson Cruises owner TUI (TUI) was the biggest FTSE faller, while outsourcers Capita (CPI) and Babcock International (BAB) came under pressure.

Recovering housebuilding firm Taylor Wimpey (TW.) reported full-year results that are expected to be at the upper end of market forecasts.

Shares in the stock rallied strongly last week, but investors cashed in for profit following the impressive update. Chief executive Pete Redfern said earnings before interest, tax and amortisation was likely to be at the top end of a range between £706m and £755m.

Insurance and travel were winning divisions for insurance provider Saga (SAGA) as it traded strongly in the second half of the year and expects to meet full year expectations.

FTSE 250 RISERS AND FALLERS

Aerospace equipment manufacturer Cobham (COB) dashed hopes of a final dividend for the year to 31 December due to rising net debt and lower-than-expected trading profit. Investors were unhappy with this latest setback and the stock fell 16% to 138.4p.

Luxury fashion brand Ted Baker (TED) was in the spotlight as sales gained 10.6% at constant currencies and margins remained firm in the 8 weeks to 7 January.

The market was encouraged by chief executive Ray Kelvin's announcement that it will deliver full-year results in line with market expectations.

Cinema chain and popcorn pusher Cineworld (CINE) reported slower revenue growth as sales declines from 12.3% in the year to 31 December 2015 to 8.3% in the 12 months to 31 December.

SMALL CAP RISERS AND FALLERS

Gold miner Golden Saint Resources (GSR) fell 9.2% as excavation work at its Tongo site revealed an overburden thickness of 5.2 meters, which resulted in the removal of 12,500 tonnes.

Eccentric welly maker Joules (JOUL) made a step in the right direction after delivering a 22.8% jump in sales over Christmas. The company reported strong growth in its new and existing stores, pushing its share price 2.2% higher.

Value shoe retailer Shoe Zone (SHOE) failed to replicate Joules' success as revenue declined by 4.2% to £159.8m as the closure of loss-making stores and difficult trading hit its books.

Recruiter PageGroup (PAGE) reported a record quarter as its gross profit gained 3.8%. Investors overlooked a 6.7% profit decline in the UK as uncertain market conditions resulted in slower recruitment.

Story provided by StockMarketWire.com

Related Company: TUI

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