London close: Stocks end session lower as Trump sworn in as US President
The FTSE 100 ended Friday’s session a touch lower as traders awaited the inauguration of Donald Trump as the 45th US President.
The index closed down 0.14% to 7,198.44 points.
The pound reversed the previous day’s gains, falling 0.11% versus the dollar at $1.2329 and dipping 0.19% against the euro to €1.1552. Meanwhile, oil prices advanced with Brent crude up 2.6% to $55.65 per barrel and West Texas Intermediate up 2.4% to $53.43 per barrel.
Trump was being sworn in as President at 1700 GMT, with market participants eager to see whether he delivers on campaign promises, including tax cuts and increased infrastructure spending.
“The day of Donald Trump’s inauguration has arrived and financial markets are displaying exactly the kind of caution you would expect given his incredible ability to send investors into a frenzy,” said Craig Erlam, senior market analyst at Oanda.
“Throughout his campaign and since winning the presidency back in November, we’ve repeatedly seen two sides to Trump; the market friendly pro-growth, low regulation side and the protectionist, combative side that makes investors extremely uneasy. With it being unclear which side he’ll lean more towards today, traders are currently opting to sit on the fence but I imagine this will change dramatically later one once the ceremony gets underway.”
Closer to home, UK retail sales fell the most since April 2012 as an increase in average store prices deterred shoppers.
The Office for National Statistics said retail sales, including auto fuel, declined 1.9% in December compared to a month ago, far worse than the 0.1% decrease expected by analysts and following a 0.2% month-on-month rise in November.
Compared to the same month a year ago, retail sales rose 4.3% in December, missing forecasts for a 7.5% increase and following a 6.6% year-on-year gain in November.
Despite a decline between November and December - removing the effects of Christmas spending - fourth quarter retail sales growth was 5.6% on the same period last year and 1.2% compared to the previous quarter.
Howard Archer, chief market analyst at IHS Global Insight, said given the strong fourth quarter growth it “still looks probable that consumers made a decent contribution to fourth quarter GDP growth” albeit likely less than in the third quarter when retail sales grew 1.8% quarter-on-quarter. “This is consistent with our view that GDP growth likely edged back to 0.5% quarter-on-quarter in the fourth quarter from 0.6% in the third quarter.”
Earlier, investors were digesting Chinese economic growth data. Figures from the National Bureau of Statistics showed China's GDP expanded 6.8% on the year in the fourth quarter of 2016. This was ahead of the 6.7% forecasts by economists.
For 2016 as a whole, however, the economy grew 6.7%, within the government’s 6.5% to 7% target but marking the weakest growth in 26 years.
China industrial production climbed an annualised 6% in December, slightly less than the forecast for a 6.1% increase and following a 6.2% gain in November.
Retail sales in the nation jumped 10.9% year-on-year in December, beating expectations for a 10.7% rise and following a 10.8% increase the previous month.
In company news, Smurfit Kappa gained after the paper and cardboard packaging company said it will hike the price of recycled containerboard by €60 a tonne.
BT Group was a top riser as it said it will bump up prices for its broadband and landline services and will start charging TV customers £3.50 for BT Sport.
Premier Inn and Costa owner Whitbread was given a boost after Barclays lifted its rating on the stock to ‘equalweight’ from ‘underweight’ and raised the target price to 4,150p from 3,340p.
On the downside, supermarkets Tesco and Sainsbury lost ground as Exane BNP Paribas downgraded the stocks.
The bank cut Tesco to ‘underperform’ from ‘neutral’ and pushed the target price down to 175p from 200p pointing to a high risk of de-rating given a building risk that inflation isn’t fully passed through to the shopper, a tougher industry volume outlook and nothing in its recent consumer survey to prove volume growth is a given.
It cut Sainsbury to ‘neutral’ from ‘outperform’, keeping the price target at 255p.
“With our target price now a little below the current share price and a building risk cost inflation isn’t passed through to the shopper smoothly, we cut our rating,” it said.
Royal Mail was under the cosh as Credit Suisse cut its price target on the stock to 481p from 559p and Jefferies downgraded its price target to 360p from 390p following the company’s disappointing update on Thursday.
AstraZeneca’s shares declined after US sector peer Bristol Myers Squibb suffered a setback in one of its immunotherapy lung cancer drug treatments.
Market Movers
FTSE 100 (UKX) 7,198.44 -0.14%
FTSE 250 (MCX) 18,143.75 -0.44%
techMARK (TASX) 3,343.35 -0.49%
FTSE 100 - Risers
Smurfit Kappa Group (SKG) 2,181.00p 4.40%
BT Group (BT.A) 387.15p 2.41%
Capita (CPI) 513.50p 2.39%
CRH (CRH) 2,836.00p 1.58%
Mondi (MNDI) 1,789.00p 1.42%
London Stock Exchange Group (LSE) 3,049.00p 1.30%
Antofagasta (ANTO) 762.00p 1.26%
Imperial Brands (IMB) 3,601.00p 1.22%
Whitbread (WTB) 4,120.00p 1.20%
Paddy Power Betfair (PPB) 8,675.00p 0.99%
FTSE 100 - Fallers
AstraZeneca (AZN) 4,318.50p -3.36%
Associated British Foods (ABF) 2,522.00p -2.44%
Barratt Developments (BDEV) 494.60p -2.16%
Tesco (TSCO) 198.30p -2.12%
Shire Plc (SHP) 4,393.00p -2.02%
Royal Mail (RMG) 414.00p -2.01%
Rolls-Royce Holdings (RR.) 688.50p -1.99%
Sainsbury (J) (SBRY) 262.70p -1.98%
Next (NXT) 3,920.00p -1.85%
Kingfisher (KGF) 343.60p -1.83%
FTSE 250 - Risers
Synthomer (SYNT) 424.70p 12.50%
Amec Foster Wheeler (AMFW) 473.40p 4.50%
Ibstock (IBST) 180.70p 2.38%
Petrofac Ltd. (PFC) 939.50p 2.34%
NMC Health (NMC) 1,650.00p 2.10%
Brown (N.) Group (BWNG) 221.30p 1.98%
Safestore Holdings (SAFE) 359.30p 1.67%
Hochschild Mining (HOC) 226.20p 1.66%
TP ICAP (TCAP) 444.00p 1.60%
Acacia Mining (ACA) 412.80p 1.40%
FTSE 250 - Fallers
AA (AA.) 254.30p -6.13%
Allied Minds (ALM) 400.00p -3.89%
Pets at Home Group (PETS) 206.50p -3.01%
Ferrexpo (FXPO) 130.10p -2.98%
Vedanta Resources (VED) 995.00p -2.93%
Debenhams (DEB) 53.25p -2.83%
Berkeley Group Holdings (The) (BKG) 2,787.00p -2.72%
Bovis Homes Group (BVS) 795.00p -2.45%
Hastings Group Holdings (HSTG) 232.40p -2.39%
Auto Trader Group (AUTO) 386.60p -2.32%