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London open: Stocks rise as Morrisons rallies on Christmas update
London stocks rose in early trade on Tuesday, helped along by a solid Christmas trading update from Morrisons.
At 0830 GMT, the FTSE 100 was up 0.4% to 7,724.36, after hitting a fresh intraday high of 7,733.39 on Monday, while the pound was flat against the euro at 1.1338 and down 0.2% versus the dollar at 1.3538.
Earlier, figures from the British Retail Consortium showed retail sales remained lacklustre in the industry’s vital festive period, with non-food sales growth the lowest in five years.
Sales increased 0.6% in December, the same as the month before, as price inflation drove a 2.6% rise in food sales that was all but wiped out by a 2.2% fall in non-food retail sales.
High street sales in the three months to December of non-food items declined 4.4% on a like-for-like basis, which is the lowest rate since 2012, when the BRC’s records began.
Helen Dickinson, the BRC’s chief executive, said: “With inflation outpacing income growth, shoppers continued to see more of their spending power absorbed by essential items, including food, leaving less left over for buying Christmas gifts.
“That made this year’s festive period all the more nail-biting for non-food retailers, many of whom offered deep discounts in the last weeks before Christmas in the hope of something to celebrate at the end of a year, which has seen, on average, zero growth in non-food sales.”
In corporate news, supermarket group Morrisons rallied as it reported on a much stronger than expected Christmas period, boosted by the roll-out of its new wholesale operations, while Unite was higher after a well-received trading update.
There was also data published on the supermarket sector from Kantar Worldpanel, which showed £1bn more was spent in the three months to Christmas than the year before. Sainsburys and Marks & Spencer also gained ground, but Tesco was in the red.
Spreadex analyst Connor Campbell said the statement from Morrisons was good news for the retail sector after the “truly terrible post-Christmas updates” from Debenhams and Mothercare.
Cigarette maker British American Tobacco was in the black as it said 2018 earnings would get a 6% boost from the recent US tax cuts “supporting our commitment to high single digit earnings growth and increased investment in the roll out of next generation products”.
Dechra Pharmaceuticals rose after it reported a 10.5% jump in half-year revenue and said changes to US taxes are expected to have a positive impact on the group, while Safestore edged up as its full-year revenues and earnings beat expectations.
On the downside, housebuilder Persimmon slipped after saying it expected full year pre-tax profits would be “modestly ahead” of market consensus, while building products distributor SIG fell despite saying its full-year results should be in line with expectations after a forex boost.
Shares in Just Group slumped after private equity firm Permira sold 50m shares in the retirement specialist at 157p each in a placing that represents a stake of around 5.3%.
