DAILY TRADING STRATEGY

Monday, Jan 22

UK OVERVIEW

U.K. blue-chip stocks turned higher into Friday’s finish, with the swing directed by a drop in the pound after British retail sales fell sharply, while a ratings upgrade left budget carrier EasyJet PLC with its best session in two months. But retail stocks were stuck in the red after the poor December sales data, and energy shares declined alongside falling oil prices. The FTSE 100 index rose 0.4% to end at 7,730.79, digging out an earlier deficit, albeit a small one. Advancers were led by the consumer goods and health caregroups, but the oil and gas, telecom and utility groups lost ground. Friday’s win was the first in five sessions. But for this week, the index ended lower by 0.6%, the first such loss in seven 
weeks. The pound traded at $1.3858 after losing grip of the $1.39 handle. Sterling late Thursday fetched $1.3895. The FTSE 100, which is heavily weighed by multinational companies, found some relief Friday when the pound pulled back from its strongest levels in more than three years. A weaker pound can help companies when they convert profit made overseas back into sterling. Among such multinationals, British American Tobacco PLC jumped 2.3% and Lysol maker Reckitt Benckiser Group PLC rose 1.8%. Sterling fell after U.K. government data showed retail sales in December sank 1.5%, a bigger-than-anticipated drop for the period that included the crucial Christmas shopping season. Britons pulled back on spending after snapping up Black Friday discounts in November. Retail stocks struggled after the data as well as beforehand, as a profit warning sent shares of flooring seller CarpetrightPLC sliding 39%, while BonmarcheHoldings PLC posted a sharp drop decline in like-for-like sales in the quarter that ended in December. DIY retailer Kingfisher PLC shares were pulled down 2.3% after Carpetright’sprofit warning. Elsewhere in the retail group, Marks & Spencer fell 0.7% and clothing and accessories seller Next PLC dropped 1.7%. Bucking the weaker trend, luxury goods maker Burberry Group rose 0.5%. But those shares slid more than 10% this week, hit after Burberry said quarterly sales fell 2%.


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