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(Alliance News) - Stocks in London ended mostly higher on Thursday as investors found relief in easing tensions between the US and Iran.
In addition, many domestic retailers suffered over the key Christmas period as consumers cut back on spending.
The FTSE 100 index closed up 23.19 points, or 0.3% at 7,598.12. The FTSE 250 ended down 8.85 points at 21,643.07, and the AIM All-Share closed up 4.97, or 0.5% at 963.01.
The Cboe UK 100 ended up 0.4% at 12,870.75, the Cboe UK 250 closed down 0.3% at 19,536.35, and the Cboe Small Companies ended down 0.2% at 12,423.80.
In Paris the CAC 40 ended up 0.2%, while the DAX 30 in Frankfurt ended up 1.3%.
"The bullish sentiment is doing the rounds as traders are not afraid of a full-on war between the US and Iran. Relations between the two counties are still poor, but traders only really care about the prospect of a war, which now seems to be very low. President Trump made it clear yesterday that he doesn't want to start a conflict with the Iranian regime, and that acted as a cue from buyers," said CMC Markets analyst David Madden.
In the FTSE 100, Just Eat closed up 1.6% at 881.62 pence after Takeaway.com said its shareholders have approved the all-share merger with the London listed online takeaway platform.
At an extraordinary general meeting Takeaway.com shareholders approved all proposals relating to the combination with Just Eat, allowing the deal worth 916 pence per Just Eat share to go ahead. This followed a previous bid of 731p, which was upped as part of a bidding war with Prosus.
Tesco closed up 0.9% as the UK's largest supermarket chain defied current trends in the domestic retail sector as it reported an increase in sales in its UK & Ireland region over the Christmas period.
In the six weeks to January 4, total UK & Republic of Ireland sales edged up 0.2% and rose 0.4% on a like-for-like basis, excluding fuel. Total group sales fell by 1.7%, however, and by 0.8% on a like-for-like basis.
Tesco's sales figures came as UK retailers suffered their worst year on record in 2019, data showed, though sales in December were boosted, albeit only due to the late timing of the Black Friday promotional period. In 2019, total sales were down by 0.1%, compared with growth of 1.2% in 2018, numbers from the British Retail Consortium-KPMG sales monitor showed.
High street stalwart Marks & Spencer said its performance over the third quarter, which includes the pivotal Christmas trading period, improved on a like-for-like basis, but total sales slipped as declines in its struggling Clothing & Home unit continued.
In the 13 weeks to December 28, total UK sales were down 0.6% year-on-year to GBP2.77 billion, but on a like-for-like basis edged 0.2% higher. Including its international unit, total sales were 0.7% lower at GBP3.02 billion. The international unit had a 2.3% sales fall to GBP251 million. The boost to UK trading was solely due to its Food unit, where sales rose by 1.5% year-on-year to GBP1.70 billion and climbed 1.4% on a like-for-like basis.
FTSE 250 member M&S closed down 9%.
Department store chain John Lewis Partnership reported a fall in sales over the Christmas period and cautioned its annual profit will be "significantly lower" on the year before, hurt by struggles in its department store chain, whose boss has now departed.
For its financial year, ending later this month, the John Lewis expects profit before exceptional items to decline year-on-year. In the year ended January 26, 2019, pretax profit before partnership bonus and exceptional items, had dropped 45% to GBP160.0 million from GBP292.8 million in financial 2018.
Paula Nickolds, managing director of John Lewis & Partners, will step down in February, after a 25-year stint with the company.
Elsewhere, Card Factory closed down 28% after the greeting cards retailer also reported a "challenging" Christmas period and said it expects a full-year earnings fall as a result.
Revenue in the 11 months to December 31 was up 3.6%, improving from 3.4% growth over the same period a year earlier, but like-for-like sales declined by 0.6%.
Over the same period in 2019, like-for-like sales were down by 0.1%. After the tough Christmas period, the company said it expects adjusted underlying earnings before interest, taxes, depreciation and amortisation, also excluding IFRS 16 adjustments, to be in the range of GBP81.0 million and GBP83.0 million in the current financial year This could represent of a decline of as much as 9.4% from GBP89.4 million last year.
Looking further ahead to financial 2021, Card Factory said its adjusted underlying Ebitda could take a hit of up to GBP10 million, amid more declines in high street footfall and a depressed pound.
In the FTSE 250, SIG ended the worst performer, down 21% after the building products supplier guided for a substantial drop in profit for 2019, amid challenging market conditions and declining revenue.
SIG reported an ongoing deterioration in the level of construction activity in key markets, and indications of further weakening, mainly in the UK. There is also challenges in sustaining sales rates, and profit protection measures implemented by SIG set to mainly take effect in 2020, not 2019 as previously expected.
As a result, underlying pretax profit for 2019 is expected to be GBP42 million, a 44% decrease from GBP75.3 million the year before.
SIG had previously warned on annual profit amid deteriorating trading conditions in October.
The pound was quoted at USD1.3045 at the London equities close, down from USD1.3088 at the close Wednesday, following dovish signals from Bank of England Governor Mark Carney.
Speaking at a BoE research workshop on 'The Future of Inflation Targeting', the outgoing central bank chief noted that in the Monetary Policy Committee's most recent projections, UK gross domestic product growth is predicted to pick up from below-potential rates, supported by a reduction in Brexit uncertainty, an easing of fiscal policy and a modest recovery in global growth.
"This rebound is not, of course, assured. The economy has been sluggish, slack has been growing, and inflation is below target. Much hinges on the speed with which domestic confidence returns. As is entirely appropriate, there is a debate at the MPC over the relative merits of near-term stimulus to reinforce the expected recovery in UK growth and inflation," Carney said.
Looking at rates, Carney said the central bank's analysis has found that "very low" interest rates are highly stimulative.
"The governor of the BoE does not make such comments lightly. Our base case is for the BoE to remain on hold in first half 2020 as economic momentum rebounds. We then expect the BoE to hike the bank rate by 25 basis points in third quarter 2020. Carney's comments today highlight the risks to this call. We thus cannot rule out a surprise rate cut or the restarting of asset purchases in the very near term. While Carney also noted that the BoE forecasts these 'negative trends to reverse', we believe it would be unnecessary for the BoE to seek to 'reinforce the expected recovery'," said Berenberg's Kallum Pickering.
The euro stood at USD1.1100 at the European equities close, marginally lower from USD1.1114 late Wednesday.
In economic news from the continent, unemployment in the eurozone remained stable at 7.5% in November, its lowest level since July 2008, data from Eurostat showed.
Against the yen, the dollar was trading at JPY109.55, up from JPY108.70 late Wednesday.
Stocks in New York were higher at the London equities close and set fresh record intraday highs as investors focused on the easing of tensions between Tehran and Washington.
The DJIA was up 0.5%, the S&P 500 index up 0.6% and the Nasdaq Composite up 0.9%.
US President Donald Trump on Wednesday pulled back from the brink of war with Iran, saying Tehran appeared to be "standing down" after firing missiles - without causing casualties - at US troops based in Iraq.
Brent oil was quoted at USD65.15 a barrel at the equities close, down from USD56.80 at the close Wednesday.
Gold was quoted at USD1,547.10 an ounce at the London equities close, down from USD1,573.70 late Wednesday.
The economic events calendar on Friday has the US jobs report for December at 1330 GMT.
The UK corporate calendar on Friday has a trading statement from sportswear retailer JD Sports Fashion.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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