London close: Benchmark finishes higher as geopolitical tensions ease

London stocks mainly remained positive by the close on Thursday, amid easing geopolitical tensions, with all eyes on the retail sector after updates from the likes of Marks & Spencer and Tesco.

The FTSE 100 ended the session 0.31% higher at 7,598.12, while the FTSE 250 dipped below the waterline in late trading to finish 0.04% weaker at 21,643.07.

Sterling was last 0.26% weaker against the dollar at $1.3063 and down 0.25% against the euro at €1.1764, after outgoing Bank of England governor Mark Carney struck a dovish tone in a speech at an event on inflation targeting, suggesting that the central bank could cut interest rates soon.

Carney cautioned that the rebound projected in the Old Lady’s forecasts for this year was not assured and noted that the economy has been "sluggish".

He said the pace of UK growth "has slowed below potential" due to the weaker external backdrop and a persistent drag from entrenched Brexit uncertainties.

"With the relatively limited space to cut Bank Rate, if evidence builds that the weakness in activity could persist, risk management considerations would favour a relatively prompt response," he said.

More broadly, sentiment was underpinned by cooling tensions between the US and Iran.

“A ceasefire between the US and Iran has seen a relief rally take hold across global markets,” said London Capital Group analyst Jasper Lawler.

“All investors needed to hear was the US President say it appears Iran is ‘standing down’.

“After that we were off to the races with fresh record highs for the S&P 500 and the Nasdaq.”

Lawler suggested there were like two truths at play, with the first being that tension between Iran and the US was not ending, and could easily escalate again.

“Already, two unexplained rocket attacks in Baghdad and threats of more revenge against the US from Iran are examples of how things can quickly get out of hand.

“Two is that markets have heard what they needed to hear and are ready to refocus on the signing of the US-China phase one deal.

“The deal is supposed to be signed next week and investors are hoping it removes the biggest source of uncertainty over the economic outlook, paving the way for more investment returns this year.”

On the corporate front, it was a veritable retail bonanza, with updates from Tesco, Marks & Spencer, John Lewis, Card Factory and Dunelm.

Tesco finished up 0.92% after it reported a 0.1% rise in underlying UK Christmas sales in what it described as a “subdued” market.

The UK's largest retailer said it had its biggest day of UK food sales in its history on the back of its “best operational performance in six years”.

Marks & Spencer was a heavy faller, dropping 9.01% after the FTSE 250 retailer reported a 0.6% decline in total third-quarter sales to £2.8bn as its clothing and home segment underperformed.

In addition, while the company backed its guidance for the year, it said gross margins were expected to be around the lower end of guidance.

M&S joint venture partner Ocado also lost ground, falling 4.31%.

Card Factory shares tumbled 28.4% as it issued a profit warning after "challenging" Christmas trading.

The company said the 2020 financial year’s adjusted underlying earnings before interest, tax, depreciation and amortisation were expected to come in at between £81m and £83m, down from £89.4m last year.

Dunelm reversed earlier gains to end the session down 3.15%, after the homeware retailer reported a 5% increase in total like-for-like sales for the second quarter.

Unlisted, employee-owned John Lewis was also in focus as it issued a profit warning, saying the staff bonus was at risk while announced the departure of managing director Paula Nickolds.

The retailer updates came as the latest data from the British Retail Consortium and KPMG showed that the UK high street endured its worst year on record in 2019 as political turmoil weighed on consumer confidence and dented festive demand.

Elsewhere, Galliford Try rose 5.15% after an upbeat trading update, while shares of pub group Mitchells & Butlers fizzed 2.73% higher after it said like for like sales grew 2.6% in the 14 weeks to 4 January, with a strong performance over the Christmas period.

Building materials group SIG tumbled 20.93% as it issued a profit warning due to deteriorating construction markets, namely in the UK.

Travis Perkins was also in the red ny 2.88%, while on the FTSE 100, B&Q owner Kingfisher declined 2.9%, with traders pointing to read-across from the SIG warning.

Market Movers

FTSE 100 (UKX) 7,598.12 0.31%
FTSE 250 (MCX) 21,643.07 -0.04%
techMARK (TASX) 4,200.33 0.36%

FTSE 100 - Risers

NMC Health (NMC) 1,340.00p 6.56%
Vodafone Group (VOD) 151.96p 3.02%
Rolls-Royce Holdings (RR.) 685.40p 2.97%
London Stock Exchange Group (LSE) 7,766.00p 2.97%
International Consolidated Airlines Group SA (CDI) (IAG) 634.60p 2.62%
Ferguson (FERG) 7,146.00p 2.38%
easyJet (EZJ) 1,438.50p 2.20%
Rentokil Initial (RTO) 455.00p 2.13%
Admiral Group (ADM) 2,319.00p 1.98%
Burberry Group (BRBY) 2,219.00p 1.98%

FTSE 100 - Fallers

Ocado Group (OCDO) 1,276.50p -4.31%
Kingfisher (KGF) 217.50p -2.90%
BHP Group (BHP) 1,771.20p -2.04%
British Land Company (BLND) 592.60p -1.69%
Pearson (PSON) 625.00p -1.64%
Next (NXT) 6,800.00p -1.53%
Land Securities Group (LAND) 963.80p -1.53%
Lloyds Banking Group (LLOY) 61.85p -1.50%
BT Group (BT.A) 193.00p -1.48%
Sainsbury (J) (SBRY) 224.30p -1.28%

FTSE 250 - Risers

Galliford Try (GFRD) 151.50p 5.15%
Kainos Group (KNOS) 774.00p 4.58%
Games Workshop Group (GAW) 6,530.00p 3.82%
Avast (AVST) 495.20p 3.55%
Premier Oil (PMO) 112.85p 3.48%
4Imprint Group (FOUR) 3,350.00p 3.40%
Centamin (DI) (CEY) 125.65p 3.37%
Finablr (FIN) 130.00p 3.17%
Hilton Food Group (HFG) 1,084.00p 3.04%
Mitchells & Butlers (MAB) 432.50p 2.73%

FTSE 250 - Fallers

SIG (SHI) 94.25p -20.93%
Marks & Spencer Group (MKS) 194.40p -11.07%
Barr (A.G.) (BAG) 526.00p -7.23%
Ferrexpo (FXPO) 147.80p -5.44%
Tullow Oil (TLW) 54.88p -5.06%
Cineworld Group (CINE) 200.70p -4.52%
Computacenter (CCC) 1,680.00p -4.38%
Grafton Group Units (GFTU) 845.00p -3.98%
Paragon Banking Group (PAG) 507.50p -3.61%
Brewin Dolphin Holdings (BRW) 358.20p -3.45%