By This Is Money Reporters
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17:30 (CLOSE): The UK’s top share index edged into positive territory for the first time in more than a week today despite further gloom over the eurozone economy.
Figures from the 18 country region showed retail sales fell 1.6 per cent in December, offsetting a rise the previous month and exceeding the 0.5 per cent fall forecast by economists. It also represented the biggest monthly decline since May 2011.
But the FTSE 100 Index shrugged off the figures to finish 8.6 points higher at 6457.9 as investors moved to pick up bargains in the wake of the recent sell-off.
Euro worries: Retail sales fell by 1.6 per cent across the Eurozone in December.
Further gains were held back after a lacklustre start to trading on America’s Dow Jones Industrial Average, which failed to maintain the rebound seen in the previous session.
The mood in London was helped by more encouragement from the dominant services sector following another strong reading in the Markit/CIPS purchasing managers’ index.
While the score of 58.3 represented the third month in a row of slowing growth, the performance was still well above the long-run trend.
The pound failed to receive a boost, remaining largely flat at 1.63 US dollars and 1.21 euros.
One of the biggest gains in the top flight came from RSA Insurance after the previous night’s announcement that former Royal Bank of Scotland boss Stephen Hester has taken over as chief executive.
Mr Hester, who left RBS in September after five years at the helm, has been tasked with leading another recovery as RSA looks to move on from the Irish accounting scandal that led to the resignation of former boss Simon Lee.
RSA shares finished 3 per cent higher after Tuesday’s announcement and were up by another 5 per cent or 4.6p to 103.6p in trading today.
Chip designer ARM Holdings rose 17.5p to 892.5p as investors returned to the company in the wake of a sharp sell-off yesterday after its warning of slower demand for high-end smartphones.
Fund supermarket Hargreaves Lansdown topped the FTSE 100 Index fallers board despite results showing an 11 per cent rise in half-year profits to 104.1million, a performance boosted by demand following the Royal Mail flotation.
The figure missed City expectations as Hargreaves said lower interest rates on cash holdings caused profits growth to lag behind a 43 per cent hike in funds under management.
Shares were 152p lower at 1345p, a fall of 10 per cent.
GlaxoSmithKline shares lifted 2 per cent or 25.5p to 1579.5p after it returned to revenue growth following two years of falling sales, albeit with a modest 1 per cent rise.
Elsewhere, fashion chain French Connection shares rocketed by 19 per cent – up 7p to 43p – after it said robust Christmas trading was expected to lead to lower-than-feared annual losses of around 4.7million, down from 7.2million the year before.
The biggest FTSE 100 risers were Tullow Oil up 56p to 849.5p, RSA Insurance ahead 4.6p at 103.6p, Associated British Foods 121p stronger at 2883p and William Hill 9.2p higher at 343.9p.
The biggest FTSE 100 fallers were Hargreaves Landsown off 152p at 1345p, Tate & Lyle down 17p at 755.5p, Sage 7.6p weaker at 407.2p and Imperial Tobacco 38p lower at 2189p.
15:35: The Footsie stayed higher in late afternoon trade, fighting off a swift drop back on Wall Street, with US stocks turning lower as some encouraging data on the services sector was countered by disappointment from a US private jobs report.
With just over an hour of trading to go, the FTSE 100 index was up 20.4 points at 6,469.6, steadying after five straight session of declines as concerns about emerging markets subsided in the face of positive data.
In New York, however, the Dow Jones Industrial Average shed 11.4 points at 15,443.8, giving back some earlier gains to retreat once more after yesterday’s rally from a big sell-off on Monday.
Footsie up: The FTSE 100 index looked set to snap a run of five straight down sessions today
Investors had been encouraged by news that the vast US services sector rebounded in January after two months of slower growth and firms added workers at the fastest clip in more than three years, according to an industry report released today.
The Institute for Supply Management said its services index rose to 54 last month from 53 in December, narrowly beating expectations of 53.7. January marked the 49th straight month the index was above 50, the level that separates expansion from contraction, though the pace of growth has slowed from a more than seven-year high of 57.9 hit in August.
But that pleasing services report was outweighed by a disappointing reading on the US private labour market, with the ADP survey showing the US private sector created 175,000 jobs in January, slightly below the expectation of 180,000, while the data for December was revised down to 227,000 from 238,000.
The ADP number caused some concern two days ahead of the release of the January US jobs report. Last month’s data disappointed, with just 74,000 jobs were created in December.
US data is being closely watched after a weak reading for the factory sector on Monday sent Wall Street into a tailspin and triggered a global equities sell-off adding to concerns about growth in China and the outlook for some emerging market economies.
13.45: The Footsie held firm at lunchtime but eased back from earlier highs after more signs that the eurozone economic recovery is failing to gain momentum.
Figures from the 18 country region – Britain’s biggest trading partner – showed retail sales fell 1.6 per cent in December, offsetting a rise the previous month and exceeding the 0.5 per cent fall forecast by economists. It also represented the biggest monthly decline since May 2011.
The latest figures put pressure on markets in France and Germany, which both slipped in to negative territory, but the FTSE 100 Index held 16.7 points higher at 6,465.7 as investors refused to be drawn into a repeat of the heavy selling seen in recent sessions.
Footsie firm: The UK blue chip index recovered from recent sharp falls in tandem with a rally by US and Asian markets
The mood was helped by more encouragement from the dominant services sector following another strong reading in the Markit/CIPS purchasing managers’ index.
While the score of 58.3 represented the third month in a row of slowing growth the performance was still well above the long-run trend.
The biggest gain in the top flight came from RSA Insurance after the previous night’s announcement that former Royal Bank of Scotland chief executive Stephen Hester has taken over as chief executive.
Hester, who left RBS in September after five years at the helm, has been tasked with leading another recovery as RSA looks to move on from the Irish accounting scandal that led to the resignation of former boss Simon Lee.
RSA shares finished 3 per cent higher after yesterday’s late announcement and were up by another 4 per cent or 3.9p to 102.9p today.
The appointment was backed by Barclays, which raised its recommendation on the stock.
Drugmaker GlaxoSmithKline was also a strong gainer, up 46.5p to 1,600.5p after it returned to modest revenue growth after two years of falling sales.
Group-wide sales edged 1 per cent higher to 26.5billion in 2013, while operating profits fell 1 per cent to 7.03billion after exchange rate movements were stripped out.
Glaxo’s chief executive Sir Andrew Witty said the overall group had made ‘significant progress’ in 2013, and he also hailed the best year for research and development in its history after five new drugs were approved in 2013.
In other corporate news, newspaper publisher Daily Mail & General Trust – owner of This is Money – rose 43p to 1,011p after it reported revenues of 472million for the first quarter of its financial year, an improvement of 6 per cent on a year earlier, boosted by strong advertising growth at Mail Online.
Fund supermarket Hargreaves Lansdown topped the FTSE 100 Index fallers, shedding 93p at 1,405.5p after its half year results missed some City expectations as the group said lower interest rates on cash holdings caused profits growth to lag behind its ‘staggering’ rise in funds under management.
Hargreaves also announced a U-turn on plans to increase charges for customers who hold investment trusts on its Vantage platform in a move that will benefit around 77,000 clients.
10.15: The FTSE 100 Index made a fragile recovery today as investors drew encouragement from a much-needed positive session in New York, with RSA Insurance the top riser as investors welcomed the appointment of Stephen Hester as its chief executive.
After initially opening lower, the FTSE 100 Index rallied to add 28.8 points at 6,478.1 by midmorning, tracking the lead of US and Asian markets.
Corporate earnings and a bout of bargain hunting helped US stocks rebound yesterday from their worst sell-off in more than seven months in the previous session.
The UK blue chip index turned higher after five straight sessions of falls, halting a recent pullback due to concerns over the health of the global economy, as concerns over US growth compounded fears over the resilience of emerging market economies.
Hester boost: Shares in RSA Insurance were strong following news of the appointment of former RBS boss Stephen Hester as its chief executive
Domestic economic news, however, was mixed today. Growth in Britain’s dominant service sector slowed unexpectedly in January but activity remained strong, suggesting the economy is picking up speed in the first quarter of 2014, a survey showed.
Markit’s services purchasing managers’ index (PMI) eased to 58.3 in January – its lowest since June – from 58.8 in December, weaker than the 59.0 reading expected but still well above the 50 level above which indicates growth.
Howard Archer, chief economist at OHS Global said: ‘There will obviously be some disappointment that the purchasing managers’ survey showed services activity moderating to a seven-month low in January, but this needs to be put into perspective.’
The services PMI slowdown mirrors a similar retreat in manufacturing figures published on Monday, although yesterday’s construction PMI showed unexpected growth.
Archer said ‘the overall tone of the January purchasing managers’ surveys reinforces our belief that economic activity has slowed slightly from the peak levels seen around the summer and autumn of last year but is still very decent.’
The biggest blue chip gainer in London was RSA Insurance, up 4.95p to 103.95p following last night’s announcement that former Royal Bank of Scotland boss Hester is to take over as the More Than insurer’s chief executive.
Hester, who left RBS in September after five years at the helm, has been tasked with leading another recovery as RSA looks to move on from the Irish accounting scandal that led to the resignation of former boss Simon Lee.
‘We view the appointment of Stephen Hester, a proven CEO with a track record of tackling challenging restructuring stories, as clearly shifting the risk/reward of the RSA stock,’ analysts at Barclays said in a note, upgrading the stock to equal weight from underweight.
Yesterday’s big FTSE 100 faller rallied today, with chip designer ARM Holdings rising 26p to 901p as investors returned to the company despite its warning on Tuesday about slower demand from high-end smartphones.
Fund supermarket Hargreaves Lansdown topped the FTSE 100 Index fallers list today, down 93.0p to 1,405.5p in the wake of results showing an 11 per cent rise in half-year profits to 104.1 million, a performance boosted by demand following the Royal Mail flotation.
Traders cited a change in fee structure, a falling interest margin and the stock’s good recent run as behind the falls, with the update otherwise showing good client growth.
Hargreaves Lansdown share price is up over 110 per cent since the beginning of 2013.
08.30: The FTSE 100 has opened up 20 points at 6,469.3, although gains are likely to be capped as investors remain concerned about the pace of global economic recovery and recent corporate earnings.
The spotlight will fall on eurozone retail sales and services data today, the European Central Bank’s interest rate decision tomorrow and the closely-watched US non-farm payrolls jobs report on Friday.
These so-called ‘risk events’ could set the market’s near-term direction after recent sharp declines following some disappointing economic numbers from the US and China.
Market watch: Emerging countries have suffered capital outflows and weaker currencies after the US Federal Reserve announced cuts to its stimulus programme
Emerging markets have suffered capital outflows and weaker currencies after the US Federal Reserve announced cuts to its stimulus programme in December. The plentiful cheap cash it generated has propped up global markets over the past few years.
Meanwhile, the fourth quarter earnings season has been unable to provide a boost to the market so far as several heavyweight companies have disappointed investors.
In the UK, chip designer ARM Holdings fell nearly 6 per cent after reporting a smaller than expected rise in fourth-quarter royalty revenues due to a slowdown in demand for some smartphones. Drugs giant GlaxoSmithKline is among companies reporting results to the City today.
The Footsie finished down 16.39 points at 6,449.27 yesterday, its lowest close since December.
Michael Hewson of CMC Markets said of recent market falls: ‘When 2014 started no-one could have imagined that barely six weeks in investors would be feeling rather shell shocked, as recent sharp declines slowly erode the early optimism that had marked sentiment at the beginning of January.
‘It is quite likely that the big question being posed by a lot of investors right now probably goes along the lines of whether these recent moves lower in equity markets are a correction, or whether we are seeing a marked a change in sentiment, and the possibility of further losses?
‘This is certainly a valid question but we also need to look at the recent falls in the context of the gains seen last year, which on reflection had started to become over-extended, as far back as the beginning of December last year.
‘Technical indicators are a great way to show when a market is running ahead of itself and looking at the S&P500 and the 200-week moving average [the average price over this period] we’ve been due a pullback for some time now.
‘Looks like we may well be getting one, which could suggest we may well have seen the highs in the medium term, particularly if emerging markets start to see a much slower rate of trend growth.’
Stocks to watch today include:
RETAILERS: Firms slashed prices at the fastest rate in at least seven years during the January sales, highlighting tough trading conditions despite an improving economy, according to British Retail Consortium figures.
RSA: The insurer has appointed former Royal Bank of Scotland boss Stephen Hester as its new chief executive with immediate effect, replacing Simon Lee who quit in December.
LLOYDS: Chief executive Antonio Horta-Osorio could be awarded and would accept a bonus of up to 2million in coming weeks, Sky News reported on Tuesday, citing Whitehall sources.
IMPERIAL TOBACCO: The tobacco company has appointed Karen Witts to the board as a independent non-executive director to the company, where she will join new chairman Mark Williamson.
HARGREAVES LANSDOWN: The investment manager saw a sharp jump in new clients in the second half of 2013, more than a third of whom joined to buy shares in Royal Mail when it listed on the stock market in October.
WOLFSON MICROELECTRONICS: The chip maker swung to an underlying loss in the final quarter of 2014 after it said a faster-than-anticipated switch to 4G mobile caused it to lose ground to a competitor.
ICAP: The interdealer broker said third quarter revenue was 6 per cent lower than the previous year due to challenging market conditions.
DAILY MAIL & GENERAL TRUST: The media group, which owns This Is Money, reported revenue of 472million in the three months to December 31, a 6 per cent year-on-year increase.
HOMESERVE: The home emergency repair firm said it is making good progress in stabilising its British business, adding that it expects adjusted profit before tax to be in line with market expectations.
PUNCH TAVERNS: The pubs group will warn its lenders that failure to pass a controversial debt restructuring deal could lead to at least five years of ‘mess’ and ‘uncertainty’, the Telegraph reported.