Spreadex Market Update
FTSE flat ahead of Bank of England rate vote; Debenhams rises whilst Burberry falls in busy morning for the high street
Starting the day effectively flat at 6350 (its mining sector falling back from the giddy highs it hit yesterday) the FTSE nevertheless remains as a year peak, Wednesday’s trading finally seeing the UK index break through the 6200 resistance level that had plagued it for a month and a half. It will be interesting to see if it can build on its current price in the immediate future; the lack of a catalyst for growth (until, potentially, Friday morning’s Chinese GDP and industrial production figures) means the FTSE may struggle to gain much ground as the day continues. Things are also complicated by noon’s Bank of England rate vote; whilst it is almost a guarantee that the MPC won’t act what tone the central bank strikes could be important to the index’s short term performance.
Whilst the economic calendar looks fairly sparse there was plenty of action for UK equities. Surpassing forecasts in style high street staple Debenhams posted a 5.5% rise in first half profit to £93.8 million, with a 1.6% surge in sales to £1.63 billion. The lack of progress in finding a replacement for the soon to be departing CEO Michael Sharp is a slight concern, though investors were firmly focused on those stellar figures, sending the stock 3% higher to graze the 80p mark.
Things weren’t as promising for luxury brand Burberry; plunging around 5.5% the company warned of a ‘challenging’ year ahead as second half sales fell 1%, inspired by a 5% drop in like-for-like retail sales in Q4. Burberry has suffered of late due to its dependency on Hong Kong and China, the haemorrhaging of sales in both regions causing havoc for its stock price, and it looks like the company’s issues have no end in sight, its retail woes joined by a forecast 10% fall in its wholesale division.
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