London close: FTSE blazes to three-month high

Even a huge blaze at one FTSE 100 company was unable to dampen enthusiasm for London's blue chip benchmark on Tuesday as it finished at its highest level in 17 weeks.

The Footsie index closed up 143 points or 2% to 7,177.37 - ending the session at its highest closing level since 9 October - as the pound slid 0.7% against the dollar to 1.2946 and down 0.4% versus the euro to 1.1354 after data showed that activity in the services sector almost flatlined last month.

The Markit/CIPS business activity index fell to 50.1 in January from 51.2 the month before, coming in below consensus expectations for a reading of 51.0 and only just above the 50.0 mark that separates contraction from expansion.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Services firms could not be clearer in blaming Brexit uncertainty for the stagnation of activity in January. The decline in new orders balance to 48.2 - the lowest level since July 2016 - from 50.9 in December, and the sub-50 level of the backlogs of work balance for the fourth consecutive month, suggest that activity even could fall over the coming months.

"A weighted average of the three PMIs points to quarter-on-quarter growth in GDP slowing to zero in Q1, from the 0.2% rate we expect in Q4 and the 0.6% rate realised in Q3."

Elsewhere, the latest BRC-KPMG retail sales monitor figures showed that UK retail sales picked up in January as shoppers were lured in by discounts following the worst December trading performance in a decade.

Like-for-like sales were up 1.8% last month compared to a 0.7% drop in December, comfortably beating expectations for a 0.2% decline. Meanwhile, total sales rose 2.2% in January compared to no growth the month before, marking the highest growth since June 2018.

BRC chief executive Helen Dickinson said: "There was a welcome return to growth this month after December’s disappointing sales figures. But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished. And it will not just be brick-and-mortar stores looking nervously to the future, as online sales continued to grow below the long term trend.

"Furthermore, the risk of a disruptive no deal Brexit could see these fortunes reversed. Unless the Government want to see well-known brands disappearing from our high streets in 2019, they should work with their colleagues in Parliament to find a solution that avoids the shock of a no deal Brexit on 29 March and removes the risks to UK consumers."

On the corporate front, oil giant BP was the standout gainer as it said profit in 2018 more than doubled to $12.7bn from $6.2bn the year before, beating consensus expectations of $11.9bn thanks to a strong performance across the business.

Richard Hunter, head of markets at Interactive Investor, said: "Global oil majors are performing strongly at present, but these numbers from BP are superlative.

"Given the complexity of the operation, BP has the ongoing challenge of keeping the overall engine purring. This has been done with some aplomb, and any number of the metrics have benefited not only from a generally higher oil price over the year, but also a streamlining of operations which has resulted in higher efficiency. This in turn means that the company estimates that it can continue to be comfortable with oil around $50 per barrel, although it has also run the slide rule over lower levels by way of contingency planning."

Ocado reversed course to trade up after saying that losses swelled last year but the online grocery specialist was able to focus on more significant developments overseas as its partners begin work on major new delivery warehouses.

Even the company's pre-tax loss widening to £44.4m from £9.8m and even a fire breaking out in the afternoon at one of its state-of-the-art fulfilment centre in Hampshire was not enough to dampen enthusiasm for the shares. More than 100 firefighters from the local fire brigade were on the site at Andover site and, although there were no reported injuries, it was understood that some machinery had been damaged and customer orders had been suspended.

Tesco and Marks & Spencer were also in the green as industry sales data from Kantar Worldpanel and Nielsen showed growth in the past few weeks, with healthy eating trends driving volumes of fresh produce up 1.5% during the last four weeks. Sainsbury's remained a laggard, with its shares flat.

Morrisons was also lifted by an upgrade to 'buy' at Berenberg, while convenience food group Greencore, which serves most of the big supermarkets, was the top riser on the FTSE 250 as Jefferies resumed coverage of the stock at 'buy'.

Just six FTSE 100 stocks ended in the red as the rally was very well distributed. Bottom of the pile were shares in Segro were down as the property developer was hit by a downgrade to 'hold' at Societe Generale.

On the FTSE 250, Indivior slumped as the anti-opioid drugmaker warned it could lose 80% of market share "in a matter of months" to generic versions of its Suboxone drug, after a court defeat in its long-running effort to stop generic competitors entering the market.

Market Movers

FTSE 100 (UKX) 7,177.37 2.04%
FTSE 250 (MCX) 18,996.02 0.78%
techMARK (TASX) 3,444.43 1.51%

FTSE 100 - Risers

BP (BP.) 547.00p 5.17%
Smurfit Kappa Group (SKG) 2,270.00p 5.09%
Ocado Group (OCDO) 1,034.00p 4.17%
Burberry Group (BRBY) 1,879.50p 3.87%
British American Tobacco (BATS) 2,780.50p 3.73%
NMC Health (NMC) 2,630.00p 3.62%
Kingfisher (KGF) 231.40p 3.44%
Intertek Group (ITRK) 5,114.00p 3.10%
Unilever (ULVR) 4,225.50p 2.97%
GlaxoSmithKline (GSK) 1,522.60p 2.88%

FTSE 100 - Fallers

SEGRO (SGRO) 641.20p -0.90%
Associated British Foods (ABF) 2,409.00p -0.54%
Fresnillo (FRES) 966.60p -0.47%
Barratt Developments (BDEV) 546.20p -0.22%
British Land Company (BLND) 569.80p -0.18%
Hiscox Limited (DI) (HSX) 1,438.00p -0.14%
Taylor Wimpey (TW.) 168.45p 0.03%
Land Securities Group (LAND) 870.60p 0.18%
Berkeley Group Holdings (The) (BKG) 3,810.00p 0.24%
Rightmove (RMV) 480.15p 0.33%

FTSE 250 - Risers

Metro Bank (MTRO) 1,353.00p 6.28%
Greencore Group (GNC) 200.60p 5.03%
Convatec Group (CTEC) 146.80p 4.48%
Synthomer (SYNT) 376.60p 3.58%
Funding Circle Holdings (FCH) 324.85p 3.37%
IWG (IWG) 232.80p 3.33%
888 Holdings (888) 174.40p 3.26%
Aveva Group (AVV) 2,838.00p 3.20%
EI Group (EIG) 208.50p 2.96%
Dunelm Group (DNLM) 739.00p 2.92%

FTSE 250 - Fallers

Indivior (INDV) 102.90p -9.06%
Superdry (SDRY) 484.40p -3.79%
FDM Group (Holdings) (FDM) 795.00p -3.40%
Just Group (JUST) 100.00p -3.38%
Contour Global (GLO) 165.60p -3.16%
Intu Properties (INTU) 116.75p -2.79%
Clarkson (CKN) 2,530.00p -2.69%
TalkTalk Telecom Group (TALK) 102.20p -2.48%
Aston Martin Lagonda Global Holdings (AML) 1,211.00p -2.10%
TI Fluid Systems (TIFS) 190.50p -2.01%