Last checked at LONDON (Alliance News) - London's equity indices rallied strongly Thursday, amid a broad-based global equities rally, with supermarkets topping the FTSE 100 gainers after Tesco outlined its plans to try and revive its fortunes.
Stocks in London rose for a second consecutive session, as hopes grew that the European Central Bank would increase monetary stimulus in the wake of figures on Wednesday showing that the eurozone slipped into deflation.
The FTSE 100 closed up 2.3% at 6,569.96, while the FTSE 250 ended up 1.5% at 16,085.54, and the AIM All-Share ended up 0.9% at 700.22. Only eight stocks ended lower in the FTSE 100.
European stocks also closed considerably higher, with the CAC 40 in Paris ending up 3.6%, and the German DAX 30 closing 3.4% higher. US stocks were also doing well for a second consecutive session, with the DJIA and the S&P 500 both up 1.6% and the Nasdaq Composite up 1.7% when the London equity markets closed.
The gains on Wednesday and Thursday mark a turnaround from the equity price falls in the first three trading sessions of 2015, when a slide in the oil price and concerns about the health of the eurozone and Chinese economies weighed on equity markets.
However, the euro hit a fresh nine-year low against the dollar of USD1.1752 on Thursday.
German factory orders declined by more than expected in November as both domestic and foreign demand decreased from October, data from Destatis revealed early Thursday. Factory orders declined 2.4% month-on-month, reversing a 2.9% rise in October. Orders were expected to fall by 0.8%.
Euro area retail sales for November rose 0.6% on the month, beating expectations of a 0.1% rise, but slowed on the year with a 1.5% rise, down from 1.6% in October. Producer prices fell 0.3% on the month in November, adding further to expectations of further ECB stimulus measures.
Tesco was the best-performing stock on the FTSE 100 Thursday, closing up 15%. The supermarket's new Chief Executive Dave Lewis announced a raft of new measures that he hopes will put the struggling supermarket chain back on track, reign in costs and help rebuild its damaged reputation.
In a trading update, which also revealed a 2.9% decline in like-for-like sales excluding fuel for its UK business for 19 weeks to January 3, Tesco announced a significant cost-efficiency programme including cutting UK central overheads by around 30%, and plans to reduce capital expenditure to GBP1 billion in the coming financial year. It said it will not pay a final dividend for the current financial year.
The UK's biggest retailer said it will be closing 43 "cash unprofitable" stores, and is also pulling out from opening a further 49 stores it had previously planned to open or just short of 2 million square feet of space. It is also set to close its benefit pension scheme to help strengthen its balance sheet, and has sold its Tesco broadband business and the video streaming unit of its Blinkbox business to telecoms company TalkTalk Telecom Group.
Bikes and car parts retailer Halfords Group was the worst performing stock on the FTSE 250, down 8.5%, after Tesco poached its CEO Matt Davies to be CEO of the supermarket's UK and Ireland business. That news overshadowed a short trading update in which Halfords said trading in the 13 weeks to December 26 was strong and in line with its expectations.
Tesco's plans for revival lifted the grocery sector as a whole, with J Sainsbury, up 9.9%, and Wm Morrison Supermarkets, up 7.8%, the two next best-performing stocks in the FTSE 100, overturning their losses from Wednesday. In the FTSE 250, Ocado Group rose 6.3%, making it the second-best performer in the mid-cap index.
However, fellow retailer Marks and Spencer Group closed as the worst blue-chip performer, down 3.5%. It reported yet another quarter of falling general merchandise sales over the key Christmas quarter, while its food sales again grew but it's recently revamped online proposition was hit by issues at its brand new distribution centre.
M&S reported 2.8% growth in food sales over the 13 weeks to December 27, or 0.1% on a like-for-like basis. It said sales hit a record in the key Christmas week and were up 17% on the year. However, its struggling general merchandise division, which includes clothing, reported a 5.4% decline in total sales, and a 5.8% decline on a like-for-like basis. Like peers, the company said it struggled to recover from the warm weather in early autumn, which kept consumers away from buying winter clothing ranges.
CRH was another top gainer in the FTSE 100, up 3.8%. The building materials company said it has spent EUR0.19 billion on 21 acquisitions and investments in 2014, while it booked proceeds of EUR0.35 billion through 16 disposals.
In the FTSE 250, Howden Joinery was among the best performers, closing up 5.5%. The joinery company said it expects its 2014 pretax profit to come in ahead of market expectations, after sales from its UK joinery depots rose about 14% on the year, representing accelerating growth that's being driven by the recovery in the UK economy and housing market.
The company said it expects to beat what it thinks is the current range of analysts' expectations for its 2014 pretax profit before exceptional items from continuing operations of between GBP172 million and GBP179 million.
Ted Baker also closed amongst the best mid-cap performers, up 5.5%. The fashion retailer posted a jump in sales over the festive period, backed by strong trading in its e-commerce business, and said its gross margins have remained steady in the absence of significant promotional activity prior to Christmas. The company said retail sales rose 22.8% in the 8 weeks from November 9 to January 3 year-on-year. Average retail square footage for the company increased by 9.2% over the period to 331,208 square foot.
In the economic calendar Friday, Chinese consumer and producer prices for December will be released at 0130 GMT before German industrial production and trade balances data for November at 0700 GMT. After the London open, UK industrial and manufacturing production and trade balances data for November will be released at 0930 GMT.
In the afternoon, the focus will be firmly on the US with the release of December nonfarm payrolls, unemployment rates and wage data at 1330 GMT.
In the corporate calendar, fast-food chain company SSP Group is scheduled to issue a first quarter trading statement. Frankie & Benny's owner The Restaurant Group will be releasing its 2014 trading statement, as will media and exhibitions company Tarsus Group, and electronics power control company XP Power. Electronics firm Laird is also set to release a trading statement.
By Neil Thakrar; neilthakrar@alliancenews.com
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