London midday: FTSE gains on supermarket rally, firmer yuan

The FTSE jumped on Tuesday as China’s central bank fixed the yuan higher and supermarket stocks rallied.

The People’s Bank of China set the mid-point for the yuan at 6.5628 per dollar, just two pips weaker than the previous strong fix and firmer than its spot levels late on Monday. The spot yuan weakened from its overnight close to 6.5733 to the dollar, but offshore it strengthened as much as 180 pips to 6.5660.

“This recovery in the offshore yuan could well be enough to help put a floor under stock markets in the short term, as US markets managed to stabilise yesterday despite posting new multi week lows during the day,” said Michael Hewson, chief market analyst at CMC Markets.

In another lift to sentiment, supermarket stocks edged higher after a better-than-expected Christmas trading report from Wm Morrison Supermarkets.

Shares in Morrisons gained after the grocer delivered like-for-like (LFL) sales growth of 0.2% in the nine weeks to 3 January, well ahead of the 2% decline predicted by analysts. Revenues over the Christmas period were helped by LFL transaction numbers in core supermarkets up 1.3% on the same period last year and online grocery sales up almost 100%.

Tesco, J Sainsbury, Marks & Spencer and Ocado Group advanced following the update.

Investors seemed to shrug off figures from Kantar Worldpanel showing sales in the British grocery market fell 0.2% in the 12 weeks to 3 January, due to the ongoing supermarket price war amid fierce competition.

Sainsbury’s was the best performer with sales up 0.8% during the period while Tesco, Asda, and Morrison’s saw sales declines of 2.7%, 3.5% and 2.6%, respectively.

Separate disappointing figures on retail sales from BRC-KPMG also didn’t seem to phase the market. UK retail sales were flat in December, with a 0.1% like-for-like increase and total sales up 1.0%, the report showed.

On a more positive note, a report from Nielsen revealed consumers spent £3.3bn in the week to Boxing Day, up 8% on the same period a year ago. Supermarket sales during Christmas week were 43% higher than in an average week, when around £2.3bn is spent, Nielsen said.

Debenhams also rallied on upbeat Christmas trading results. For the 19 weeks to 9 January, like-for-like sales were up 1.9%, comfortably beating expectations for a 0.1% drop and better than last year’s 0.8% decline.

Among other corporate stocks away from retail, BHP Billiton slumped after HSBC downgraded the stock to ‘reduce’ from ‘hold’ and cut the price target to 590p from 1,100p saying the company faces further headwinds from oil and iron ore.

Premier Oil was under pressure after Jefferies cut its rating on the stock to ‘hold’ from ‘buy’ and slashed the target price to 33p from 120p. “The near-term outlook for the oil market is bleak as global over-supply continues,” said analyst Mark Wilson.

Oil prices recovered slightly at midday, with Brent crude up 0.7% to $31.80 per barrel and West Texas Intermediate increased 0.19% to $31.47 per barrel.

On the economic data front, UK industrial production rose 0.9% in November from the same month a year ago, missing expectations for a 1.7% rise. Manufacturing output fell 1.2% year-on-year in November, more than the 0.8% dip that was anticipated by analysts.

Market Movers

FTSE 100 (UKX) 5,965.21 1.59%
FTSE 250 (MCX) 16,788.72 0.78%
techMARK (TASX) 3,163.25 1.17%

FTSE 100 - Risers

Anglo American (AAL) 246.40p 6.92%
Tesco (TSCO) 155.05p 6.60%
Berkeley Group Holdings (The) (BKG) 3,678.00p 3.96%
Old Mutual (OML) 161.40p 3.73%
GKN (GKN) 289.00p 3.70%
Burberry Group (BRBY) 1,120.00p 3.32%
Pearson (PSON) 702.00p 2.86%
BT Group (BT.A) 476.05p 2.82%
Shire Plc (SHP) 4,035.00p 2.80%
Barratt Developments (BDEV) 611.00p 2.78%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,340.00p -0.67%
Hikma Pharmaceuticals (HIK) 2,150.00p -0.28%
Inmarsat (ISAT) 1,105.00p -0.18%
Aberdeen Asset Management (ADN) 249.90p -0.00%
DCC (DCC) 5,345.00p -0.00%
Severn Trent (SVT) 2,130.00p 0.00%
Antofagasta (ANTO) 387.80p 0.03%
United Utilities Group (UU.) 937.00p 0.05%
BAE Systems (BA.) 527.00p 0.09%
BHP Billiton (BLT) 636.80p 0.11%

FTSE 250 - Risers

Debenhams (DEB) 77.25p 17.05%
Morrison (Wm) Supermarkets (MRW) 164.50p 8.01%
Vectura Group (VEC) 199.40p 7.20%
Vedanta Resources (VED) 220.30p 6.12%
Jimmy Choo (CHOO) 129.30p 5.38%
Evraz (EVR) 65.45p 4.72%
Jupiter Fund Management (JUP) 437.00p 4.17%
Galliford Try (GFRD) 1,523.00p 4.03%
Brown (N.) Group (BWNG) 293.80p 3.82%
Morgan Advanced Materials (MGAM) 233.90p 3.45%

FTSE 250 - Fallers

Greggs (GRG) 1,123.00p -8.33%
Michael Page International (MPI) 410.00p -8.20%
Hays (HAS) 124.00p -4.54%
Just Eat (JE.) 455.20p -4.43%
Cineworld Group (CINE) 520.50p -3.16%
Indivior (INDV) 175.90p -1.95%
Tullow Oil (TLW) 130.20p -1.88%
Acacia Mining (ACA) 178.80p -1.87%
Booker Group (BOK) 168.90p -1.69%
Riverstone Energy Limited (RSE) 761.00p -1.68%