LONDON MARKETS: FTSE 100 Marks Best Week Since 2016, As Global Stocks Rebound
February 16 2018 - 12:33PM
Dow Jones News
By Carla Mozee, MarketWatch
British retail sales slow more than expected in January
U.K. stocks leapt Friday, closing with their best weekly
performance in 14 months as London's blue-chip index followed the
recovery effort for battered U.S. equities.
FTSE stocks held on to gains after the U.K. government reported
a larger-than-expected slowdown in retail-sales growth last
month.
How markets performed
The FTSE 100 rose by 0.8% to 7,294.70. The telecom and utility
groups topped advancers, while only the basic materials sector
lagged. On Thursday, the benchmark rose 0.3%
(http://www.marketwatch.com/story/ftse-100-moves-solidly-higher-as-oil-and-mining-stocks-rise-2018-02-15),
a third straight winning session.
British retail sales missed expectations, but sterling remained
on track for a weekly jump of 1.8% against the U.S. dollar . The
pound bought $1.4060, down from $1.4100 late Thursday in New
York.
The yield on the 10-year gilt dropped 8 basis points to 1.57%,
according to Tradeweb. Yields fall when prices rise.
What moved markets
U.K. and broader European markets stuck firmly in positive
territory Friday, appearing to be taking their cue from Wall
Street. U.S. stocks continued to run higher for a sixth straight
session on Friday
(http://www.marketwatch.com/story/dow-ready-to-hold-above-25000-as-us-stocks-line-up-best-week-more-than-a-year-2018-02-16),
with investors willing to embracing risk going into the Presidents
Day holiday in the U.S. on Monday.
After the recent meltdown in global equities, the FTSE 100 ended
this week 2.9% higher, its best week since December 2016. That's
also first gain after four consecutive weekly losses. The S&P
500 , the Dow Jones Industrial Average and the Nasdaq Composite
Index were also poised for their strongest weekly performances in
years.
The recent global selloff in equities is seen as prompted partly
by a rise in U.S. bond yields amid signs of an uptick in inflation.
But after the release this week of stronger-than-expected U.S.
inflation data
(http://www.marketwatch.com/story/cpi-surges-05-in-january-but-yearly-rate-of-inflation-unchanged-2018-02-14),
investors scooped up beaten-down stocks.
Read:This market selloff was overdue, but now it looks overdone,
strategists say
(http://www.marketwatch.com/story/this-market-selloff-was-overdue-but-now-it-looks-overdone-strategists-say-2018-02-10)
Also check out: More investors looking to cut U.K. assets as
Brexit uncertainty persists
(http://www.marketwatch.com/story/more-investors-looking-to-cut-uk-assets-as-brexit-uncertainty-persists-2018-02-16)
What strategists were saying
"Where Wall Street goes, other markets follow, and this bounce
back from last week's lows is no different. Traders are quickly
getting used to higher bond yields, higher inflation and another
round of hikes in global interest rates that will follow, so much
so that U.S. stocks are recovering twice as fast as in London,"
said Lee Wild, head of equity strategy at Interactive Investor.
"Markets will remain volatile, for sure, but we've just found
out that big investors can't stay out of this market for long, and
demand for equities typically picks up in the weeks before tax
year-end," Wild said in a note.
Economic data
Growth in consumer spending slowed more than expected in
January. Retail sales increased 0.1% on the month
(http://www.marketwatch.com/story/uk-retail-sales-growth-slows-more-than-expected-2018-02-16),
the Office for National Statistics said, missing expectations of
0.6% in a Wall Street Journal survey of analysts. The result comes
after sales dropped 1.4% in December.
Sales rose 1.6% year-over-year, lower than the 2.4% rate in the
year-ago period.
"The Bank of England says wage growth is on an upward
trajectory, while inflation may well have peaked. This means we
could see an end to falling real wages in the coming months, which
would provide a welcome fillip to cash-strapped households," said
Ben Brettell, senior economist at Hargreaves Lansdown, in a
note.
"Assuming pay growth figures over the next couple of months back
up this theory, it still looks like the Monetary Policy Committee
will have the confidence to raise interest rates to 0.75% in May,"
he added.
Stock movers
Segro PLC shares (SGRO.LN) jumped 6.5%, their best percentage
rise since June 2016, after the property-investment company raised
its dividend by 6.1%
(http://www.marketwatch.com/story/segro-2017-profit-more-than-doubles-2018-02-16-24853926),
and said pretax profit for 2017 more than doubled.
Among the handful of FTSE decliners, Randgold Resources PLC
(RRS.LN) fell 2.1%, copper producer Antofagasta PLC (ANTO.LN) gave
up 1.9% and cruise operator Carnival PLC (CCL.LN) ended 1.1%
lower.
(END) Dow Jones Newswires
February 16, 2018 12:18 ET (17:18 GMT)
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