Stocks punished on the London market
Consumer-facing stocks were on the receiving end of some punishment today on the London market thanks to a miserable update from the high street.
Retail bellwether John Lewis unveiled a 27% half year profits plunge, while Argos owner Home Retail Group and Morrisons also underscored the pressure facing the sector.
With banks also on the back foot, the FTSE 100 Index closed down nearly 1%, or 47.8 points, at 5318.4. Losses among London’s top flight had been much worse amid heavy early selling on Wall Street, but they rallied towards the close.
Sentiment during the session was not helped by the pound slumping to a two-and-a-half-year low against the dollar – below $1.75 – in the wake of gloomy economic warnings from Bank of England policymakers at the latest Treasury Select Committee meeting.
Retailers dominated the fallers board after the John Lewis profits fall. The group’s department store chain saw like-for-like sales fall 1% in the six months to July 26, with home goods down 5% in the struggling property market.
Morrisons was the worst hit blue chip stock, down more than 6%, or 16.5p to 253.75p. That came despite the chain unveiling a 7.6% rise in first half same-store sales, but analysts noted the chain’s increased use of price cuts as it looks to lure in hard-pressed shoppers.
Sainsbury’s was another hefty faller, down 21.75p to 345.25p and B&Q owner Kingfisher slipped 7.4p to 130.1p. Marks & Spencer also lost 7.75p to 240p.
Home Retail’s trading update showed Argos sales dropped 5.8% in the second quarter of its financial year, with sister company Homebase off 8.3%. The FTSE 250 stock fell 13.75p to 228p.
Among the banks lower today, Halifax Bank of Scotland fell 13p to 286p, Lloyds TSB slipped 12p to 283p and Barclays dropped 8p to 338.5p.
Broadcaster ITV was high up the FTSE 100 Index risers board, ahead by 3% or 1.1p to 49.9p, amid takeover speculation prompted by former suitor Virgin Media’s hiring of former boss Charles Allen as a director. But ITV discovered yesterday it will be leaving the Footsie later this month because of its recent share price woes.
Another stock heading for the trap door, Carphone Warehouse, fell 6.4p to 185.9p.
Heavier Footsie losses were avoided thanks to gains for miners which have been subject to heavy selling recently. Anglo American led the way, 113p better off at 2308p, with Xstrata not far behind after a gain of 50p to 2275p.
Another big gain came from prospector BG Group after it announced more drilling success off the coast of Brazil. Shares were up almost 5% or 45p to 1100p.
The Footsie’s four biggest risers were Anglo American, up 113p to 2308p, BG Group up 45p to 1100p, Smiths Group up 38p to 1063p and Drax Group, which closed up 24p to 758p.
The four biggest fallers were Morrisons, down 16.5p to 253.75p, Eurasian Natural Resources down 39.5p at 662p, Sainsbury’s down 21.75p to 345.25p and Kingfisher, which ended the day down 7.4p at 130.1p.
