After shrugging of a quick swoon lower following reports that China planned to stop its purchases of US Treasuries, the FTSE 100 ended Wednesday at another all-time high and this morning's trade has seen a fresh intra-day peak recorded. The Pound is coming under a little more pressure today with the GBPUSD back below 1.35 as political instability continues to provide a headwind.
FX effects boost the Miners
The latest gains in the FTSE are being driven in no small part by mining stocks as Anglo American, BHP Billiton and Rio Tinto are all making steady moves higher. These firms are among the most sensitive to the strength of Sterling as they generate the majority of their revenues overseas but report them in Pounds and with the domestic currency looking set for a 4th daily decline their stock has risen.
M&S sales unexpectedly decline
Supermarkets have endured a volatile start to the New Year with mixed reports of performance over the important festive period seeing fairly large fluctuations in their stock prices. Marks and Spencer rose sharply earlier in the week after a strong set of earnings from Morrisons and an upbeat assessment of the sector's Christmas trade led investors to believe that the upcoming earnings release for M&S would beat forecasts. However, this morning's announcement has caught those trying to pre-empt the results wrong footed with a 0.1% decline in sales for the quarter ending 30 December marking a sharp decline on the 1.3% gain seen for the same period in 2016. A flurry of selling has hit the stock, with the share price currently lower by more than 5% leaving the firm languishing at the bottom of the FTSE leaderboard.
Tesco drops despite strong festive period
Rival firm Tesco has been arguably the best performer of the "big four" supermarkets over the festive period but despite posting like-for-like sales growth of 1.9% and an impressive rise in food sales of 3.4% - outperforming its rivals by almost 4% - the latest results haven't surpassed elevated expectations. The decline of more than 3% in the stock price could be explained away as a buy-the-rumour-sell-the-news type of reaction but a more plausible explanation is the impact felt from the demise of Palmer & Harvey. The wholesales went into administration in November and Tesco has revealed the disruption this has caused to its own business in trying to replicate the distribution network and source cigarettes and rolling papers directly from tobacco makers. Tobacco revenues fell by 0.6% for the quarter and with a similar size decline in sales of laptops and video consoles the drop in general merchandise figures has taken the shine off a strong performance in the grocery sector and sent the stock lower.
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