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The Guardian - UK
The Guardian - UK
Business
Graeme Wearden

FTSE 100 closes at new peak but Tesco and M&S slump after Christmas updates - as it happened

Shoppers on Oxford Street in London
Shoppers on Oxford Street in London Photograph: Daniel Leal-Olivas/AFP/Getty Images

European markets slip after euro rise

The FTSE 100 may have hit a new peak, Wall Street may have recovered from Wednesday’s losses but the mood was more downbeat in Europe.

The strengthening euro after the more hawkish than expected minutes from the European Central Bank pushed a number of European markets into the red by the close of trading. The final scores showed:

  • The FTSE 100 finished up 14.43 points or 0.19% at 7762.94
  • Germany’s Dax was down 0.59% at 13,202.90
  • France’s Cac closed 0.29% lower at 5488.55
  • But Italy’s FTSE MIB rose 0.64% to 23,305.26
  • Spain’s Ibex edged up 0.07% at 10,435.2
  • In Greece, the Athens market added 1.28% to 846.98

On Wall Street, the Dow Jones Industrial Average is currently up 142 points or 0.56%.

On that note, it’s time to close for the day. Thanks for all your comments, and we’ll be back tomorrow.

One of the consequences of today’s market moves is that Just Eat has overtaken Marks & Spencer in market value.

WIth its 4.7% rise Just Eat is now worth £5.46bn. Marks on the other hand has fallen 7% to be valued at £4.87bn.

FTSE 100 closes at a new peak

Another day, another record close for the FTSE 100.

Despite a poor performance from key retailers following their updates - Marks & Spencer is down 7% and Tesco off 4.5% - the leading index has added 0.19% to a new record of 7762.94. Earlier it recorded a new intraday peak of 7768.96.

Commodity stocks were in demand following the rise in oil prices, while the biggest gainer was Just Eat, up nearly 5% as analysts at Barclays raised their price target from 700p to 1000p.

Brent crude has climbed above $70 a barrel, a new three year high. Growing demand as the global economy strengthens and the effect of Opec and Russia’s agreement to extend output caps continue to support the price.

But it is bad news for motorists, who face an increase in petrol prices:

Connor Campbell, financial analyst at Spreadex, said:

The euro rocketed higher this Thursday afternoon following a slightly more hawkish than expected set of ECB meeting minutes.

While the end of QE isn’t here just yet, there were a few notable shifts in the phrasing of the central bank’s December accounts that suggest talk of winding down its massive bond buying programme is likely going to become more and more prevalent as 2018 continues. Of course the euro – which at the moment doesn’t need much excuse to celebrate – was incredibly receptive to these signals.

Here’s the chief business economist at IHS Markit on the ECB minutes:

The euro gained 0.9% to $1.2053 following the release of the ECB minutes, although it has now come off its best levels and is currently sitting at $1.1.2045.

It is up around 5% against the pound at 88.9p.

ECB minutes show more hawkish outlook

Earlier, a more hawkish tone from the minutes of the recent European Central Bank meeting gave some support to the euro.

With the eurozone economy improving, the ECB minutes suggested policymakers might soon start preparing the markets for the end of its massive stimulus programme. The minutes said:

The language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in [2018].

John Dolan, senior dealer at FEXCO Corporate Payments, said:

The ECB’s mood music has dramatically picked up the tempo. While this is far from a definitive announcement, it’s a clear signal that monetary policy tightening has entered mainstream ECB thought.

On this evidence, the end of loose monetary policy is coming, and coming faster than previously assumed.

But despite the Eurozone’s increasingly brisk growth rate, the ECB is still deeply concerned about inflation and the stubbornly low pace of wage rises.

So for all the hawkish nods and winks in today’s minutes, the QE money presses are still expected to keep turning until September.

The euro has strengthened as markets adjust to this change of tone, and the stakes for Mario Draghi’s next press conference have notched up as markets dare to hope that the ECB is finally ready to wean the Eurozone economy off monetary stimulus.

Economist Carsten Brzeski at ING believes there will be no abrupt end to QE:

It is unsurprising that the ECB is not ignoring further steps in its tapering (or recalibration) process. Phrases [in the minutes] indicate a further adjustment but in our view no abrupt end.

We stick to our previous view that the ECB will not stop QE in September but will rather decide on another “lower for longer” beyond September, probably until the end of the year. Interestingly, the ECB is more and more focusing on growth and seems to regard inflation only as a derivative of growth developments. Judging from previous experiences, to get an inflation rate sustainably at around 2%, the Eurozone economy needs to have a positive output gap. This could, but does not necessarily have to, happen in the course of 2018.

It is also obvious that the ECB’s balancing act between uniting the Governing Council and not distorting markets on the rest of the way towards the exit is a difficult one. While the ECB had actually tried to hush speculation with the October decision for “lower for longer”, some ECB officials’ talks are clearly undermining this intention. In this regards, next week should be interesting when both Jens “the hawk” Weidmann and Benoit “first proponent now advocate for a September end” Coeure will have public appearances.

Updated

Wall Street opens higher

US stock markets have opened in positive territory, as concerns about the bond market eased (pace Bill Gross).

Investors were put on edge on Wednesday after reports that China was planning to cut its buying of US Treasuries. A denial however seems to have calmed the nerves a little, for the moment at least. Craig Erlam, senior market analyst at Oanda, said:

US stocks, Treasuries and the dollar all sold off [on Wednesday] on reports that China is considering cutting purchases of Treasuries. China is a huge buyer of US debt and so, should the reports turn out to be correct, one would expect yields on US debt to rise, which is why we saw such a knee jerk reaction.

The report was later denied and even labelled fake news by China’s FX regulator, which prompted an unwinding of the earlier moves, although investors appear to have remained on edge. Yields had already been rising in the 24 hours preceding the report after the Bank of Japan bought fewer 10-25 year and 25-40 year JGBs than it had been previously, prompting speculation that monetary stimulus is being withdrawn, despite the central bank having claimed only last month that tightening is not imminent.

Despite any remaining jitters, the Dow Jones Industrial Average has recovered 55 points or 0.23% ahead of a host of forthcoming trading updates. The S&P 500 opened 0.23% higher while the Nasdaq 100 is up 0.21%.

A quick recap

Time for a quick recap, before Wall Street opens.

Marks & Spencer has been crowned as a Christmas loser, after reporting underwhelming sales figures. The high street chain suffered a 2.8% decline in clothing sales, while food - often a solid performer - shrank by 0.4%.

Shares in M&S have slumped to the bottom of the FTSE 100 leaderboard, down 6.5% right now, taking the Footsie away from a record high.

Analysts say the figures show that M&S is suffering from weak consumer confidence, and the growth of e-commerce.

Tesco’s shares have also been pummelled today, down 4%, even though it recorded a ‘record’ Christmas.

Tesco grew sales by 1.9% over Christmas, which wasn’t enough to meet City forecasts. But analysts are hopeful the CEO Dave Lewis’s turnaround plan is working.

Another street name, John Lewis, warned that its profits have been hit by inflation - even though sales were up year-on-year. Black Friday was a record, but that could actually have eroded John Lewis’s profitability, thanks to its promise to never be knowingly undersold....

In other news....

Newsflash: More Americans became unemployed last week than expected.

The number of US citizens filing new claims for jobless benefit jumped by 11,000, to 261,000 - which is 10,000 more than expected.

That suggests that US companies cut staff at the turn of the year, and might be a sign that the labor market is weakening. Or it could just be down to seasonal factors.

Dennis de Jong, managing director at UFX.com, says:

“The trend of rising US jobless claims looks to be gathering momentum into the early parts of 2018, with today’s reading confirming a fourth rise in as many weeks.

“While the White House will need to address why such a traditionally robust labour market has begun to dwindle in recent months, there will be no reaching for the panic button just yet as labour market data during year-end holidays tends to be a little unpredictable. The severe cold snap can also be blamed for keeping people out of work.

“Any figures that remain under the 300,000 barrier will be viewed as positive, and President Trump can be comfortable for now knowing that the jobs market will likely remain tight for the foreseeable future.”

Spotted: The best reaction to Bill Gross’s comments:

Bill Gross: Bonds, like men, are in a bear market.

Bill Gross, Portfolio Manager, Janus Capital Group.

An influential billionaire investor has warned that US government debt has entered a bear market -- just like your average man.

In remarks that might cause a stir, Bill Gross of Janus has compared the US Treasury market to the recent torrent of revelations about unacceptable conduct by wealthy and powerful men.

Bonds, like men, are falling in value and will continue to depreciate, Gross says in a new letter to his clients.

He writes:

Bonds, like men, are in a bear market.

For both, it’s hard to say when it all began. There was no Helen Reddy “I Am Woman” moment back in June 2012, and then again in July 2016 when the 10 year Treasury double-bottomed at 1.45%, but then in retrospect it should have been obvious that for bonds, like men – “their time was up”.

Eighteen months ago, it was obvious to most observers that the economy, measured by nominal GDP, was not going to go much lower than 3% and that the Fed was having second thoughts about quantitative easing.

Gross does ‘concede’ that men have some positive qualities - not losing the remote control (!) and starting wars (good for economic progress, don’tcha know).

But his serious point is that US bond prices rose much too high after the financial crisis, sending the yield (rate of return) to historically ultra-low levels. That process has started to reverse recently -- the US 10-year Treasury bond now yields 2.55% today, up from that 1.45% 18 months ago.

Gross argues that the bear market will drive prices down, and yields up, during 2018.

As he puts it:

Oprah shouted, “Their time has come”. The bear bond market’s time has come as well. Many would say, including yours truly – “It’s about time”.

He’s not the first to predict this. US bond yields have been creeping higher for months, as the US Federal Reserve continued to unwind its stimulus programme. Donald Trump’s tax cuts are another factor - they could push inflation higher, which is usually bad for bond prices.

Gross has a reputation for ‘colourful’ commentary, and some observers aren’t too impressed by today’s effort:

But.... Gross isn’t actually criticising the #MeToo campaign, and he backs the idea of Oprah Winfrey could run for president.

Indeed, he argues:

Actually most of the world’s problems would go away if men just stayed home, watched football and learned to talk to their partners during commercial breaks. There are certainly enough of them.

Updated

Pandora jewellery.

Jewellery maker Pandora has added to the anxiety in the retail sector today by missing its sales targets for the last year.

The news sent its shares spiralling down by over 10%, on track for their worst day in six years.

Reuters has the details:

Pandora missed its own 2017 sales forecasts on Thursday and warned of thinner margins ahead, putting shares in the world’s largest jewellery maker on course for their worst day in more than six years.

In a trading update, Pandora said it aims to generate around half of its revenue from rings, earrings and necklaces by 2022 and would increase its annual collections to 10 per year from seven.

The Danish firm also aims to increase the share of its owned stores in a bid to gain larger share of revenue and better be able to control its brand.

FTSE 100 hits record high despite sliding retailers

Boom! Britain’s FTSE 100 has just hit a new all-time intraday high.

The blue-chip index has risen to 7,764 points for the first time ever, up 15 points this morning, extending its recent rally.

Online takeaway ordering app Just Eat is the top riser, up over 5% at 809p. That’s because Barclays has just hiked its target for its shares to £10, from 700p, in recognition of its blistering sales growth.

But traditional retailers are having a tougher time. Marks & Spencer is down almost 6%, while Tesco has lost 4.3% today.

By my reckoning, that takes Marks & Spencer’s value down to around £5bn, while Just Eat is now worth nearly £5.5bn.

Quite remarkable. A business without any stores, that doesn’t actually produce the food its customers eat, can be worth more than a company with over 900 UK stores and 30 million-plus customers.

Hugh Fletcher, Global Head of Consultancy and Innovation at ecommerce consultancy Salmon, says ‘forward-looking’ UK retailers who embraced technology are now reaping the rewards.

He writes:

“The Christmas sales figures from retailers this week paints a varied picture of their success, with mixed sales performance across the industry. The retailers who have spent time investing and learning about omni-channel strategies are those that are starting to pull away from the less digitally literate ones, with the likes of Boohoo and Ted Baker revealing strong online sales for the Christmas period, with the latter reporting a huge 35% rise in online sales.

The hard work of years of investment and organisational change is now visible, and with these stats there’s no hiding for the digital laggards.

Earlier this week Marks & Spencer announced a major shake-up of its IT system; a sign that its previous technology efforts weren’t really paying off.

A Greek flag in front of the Athens parliament

Over in Greece the statistics service has announced a further drop in unemployment - by far the country’s biggest social ill.

Helena Smith reports from Athens.

From a record high of of almost 28% in September 2013, Greece’s jobless rate dropped to 20.7% in October with Elstat, the country’s statistics agency, putting the number of registered unemployed at 990.288 people.

At the height of Athens’ debt crisis five years ago more than 1.3 million Greeks were recorded as being out of work resulting in a massive exodus of well-trained professionals to wealthier European countries.

But Greece’s youth continue to pay a high price with the jobless rate among those under the age of 25 hovering at 40.8% - down from 44.4% a year ago. Greece has by far the highest unemployment rate in the euro zone - along with a debt pile that stands at around €320bn, also the highest in the EU.

If budget projections are correct unemployment could fall to 18.4% this year, in a country whose economic output has dropped by around 26% since 2008.

Updated

Take note, consumers and retailers. Lenders are making it harder to get credit.

The Bank of England has just reported that the availability of unsecured credit to households decreased in the last three months of 2017 - the fourth quarterly decline in a row.

That’s because lenders took a tougher line when assessing applications, and are likely to keep tightening in 2018.

The BoE says:

Lenders expected a significant decrease in Q1 [January-March 2018].

Credit scoring criteria for granting total unsecured loan applications tightened again in Q4, and lenders expected them to tighten significantly further in Q1.

The latest eurozone factory figures are out, and they’re sparklingly good.

Eurozone industrial production jumped by 1% during November, and was 3.2% higher than a year earlier.

October’s growth rate was also revised up, from 0.2% to 0.4%, further suggesting that manufacturers ended 2017 on a high.

Most of Britain’s major retailers have now reported financial results for the festive period.

Tesco look like one of the winners (despite missing City forecasts), while M&S are firmly in the losers camp after its clothing and food sales fell.

We’re keeping tabs on the sector here:

Getting back to Britain’s retailers, Martin Lane of money.co.uk says Tesco fought a good fight over Christmas, while M&S struggled:

“Tesco is still facing fierce competition from the likes of Aldi and Lidl, but these results show they are still holding their ground. They can’t afford to rest on their laurels though. With both Sainsbury’s and Morrisons beating their Christmas trading forecasts, the supermarket giant needs to keep prices competitive despite inflation to keep customers loyal and coming back for more.

“These positive results come in stark contrast to Marks and Spencer’s who are suffering. Their signature luxury products are being undercut by bargain supermarkets at a fraction of the price. Shoppers expect quality and convenience for less than ever before, and M&S simply aren’t offering that at the moment.”

German economic growth hits six-year high

German Chancellor Angela Merkel arriving for coalition talks with the Social Democratic Party in Berlin this morning
German Chancellor Angela Merkel arriving for coalition talks with the Social Democratic Party in Berlin this morning Photograph: Markus Schreiber/AP

Breaking away from UK retailers, we have some strong economic data from Germany.

The German economy expanded by 2.2% in 2017, the fastest rate since 2011. Once you adjust for working day changes, GDP actually rose by 2.5%.

It’s a stronger performance than many experts were predicting last year, when political risks threatened the German economy.

Carsten Brzeski of ING says:

Today’s GDP data mark the end of a remarkable year for the German economy. A year ago, consensus forecasts for German growth were around 1.5% for 2017. Now, GDP growth is likely to come in at around 2.5%. How could the German (and the Eurozone) economy surprise so positively?

A year ago, the German recovery already looked rather stretched. Sentiment indicators stagnated, with Brexit, the upcoming Dutch and French elections political risks had increased, and the new US administration had added possible trade wars into the growth equation of every forecaster. One year later the lesson is clear: “it was not politics, but economics, stupid”.

Following a real Trump-spirit, the strong labour market, low interest rates and low inflation pushed the domestic economy into a sixth gear. Also, instead of suffering from protectionism or a Trump trade war, exports surged to new record highs and the long awaited investment pick-up finally kicked in. The result: the strongest annual growth performance since 2011.

Yikes! Shares in Marks & Spencer are now down 5% as the selloff gathers pace.

Chief executive Steve Rowe has told journalists that Britain is suffering a spending squeeze.

This means the UK consumer is “quite fragile, quite volatile”, Rowe adds (rather like M&S’s share price this morning...)

M&S: What the experts say

Richard Lim, chief executive at Retail Economics, says Marks & Spencer’s financial results for the last three months paint a worrying picture:

M&S continues to struggle with the sheer pace of structural change reshaping the industry.

The business model has come under increasing strain as the unforgiving shift towards online and the experience economy collide with inflexible leases, high rents and excess properties.”

Laith Khalaf, senior analyst at Hargreaves Lansdown, isn’t impressed either:

‘This is a disappointing set of figures for M&S, particularly in its food and online businesses. Sales in clothing and home actually fell by the biggest margin, but in a market which is shrinking, that’s more a reflection of wider economic trends.

In recent years the food business has been the bright light of the M&S empire, but its glow has definitely dimmed of late. That’s probably a result of consumers tightening their belts when it comes to grocery shopping, and the strong performance of supermarket premium ranges suggests when customers are splashing out, they are increasingly doing it at Sainsbury, Tesco and Morrison rather than at M&S.

Online sales growth at M&S also looks pretty feeble when compared to the wider market. Steve Rowe’s target of pushing digital sales at M&S to one third of the total looks like a steep climb from here, and he’ll be hoping a new deal to outsource 250 IT jobs to the Indian conglomerate Tata is part of the solution.

It’s still early days in the M&S turnaround plan, however the risk is by the time M&S gets up to speed, the rest of the pack might have disappeared out of sight.’

Connor Campbell of SpreadEx is also concerned by the drop in food sales:

While M&S avoided a Debenhams-esque disaster, it was a long way from Next’s surprisingly strong Xmas numbers. The perpetually unfashionable clothing and home business was, as ever, the headline casualty, posting a 2.8% plunge in like-for-like sales across the 13 weeks to the end of December – hardly a surprise given the division’s head, Jo Jenkins, shockingly jumped ship in October.

But, but, but, the clothing department is always a bit rubbish; how about the food business, ostensibly the company’s shining star which, on paper, should have received a Christmas boost? Well once again the division under-performed expectations, suffering a 0.4% decline in comparable sales at the same time as its major supermarket rivals all saw some level of growth.

Marks & Spencer just can’t shake its image as a sector dinosaur, with these results nipping a nascent rise in the bud as it fell 2.5% after the bell.

Tesco: What the experts say

Bryan Roberts, global insight director at tcc global, says Tesco’s turnaround plan is on course.

“Despite many predictions that Tesco had ‘won’ Christmas, with that accolade instead being shared by Morrisons and the Co-op, the market leader nonetheless enjoyed a very creditable festive period. We were impressed by Tesco’s seasonal ranging and merchandising across both food and general merchandise, backed up by solid availability and ongoing improvements in customer service and shopper experience.

“While a lot of attention in 2018 will be focused on the integration of Booker, we feel confident that the core supermarkets are in largely good shape.”

Retail analyst Steve Dresser agrees:

Neil Wilson of ETX Capital points out that Tesco’s food sales did well:

“Lots to be positive about for Tesco as the Dave Lewis turnaround continues to yield results. Q3 was strong with like-for-like sales +2.3%, with a particularly good performance in Fresh Food, which grew by 3.7% in the UK.

Stronger grocery and fresh food sales offset a less impressive performance in general merchandise and slower tobacco sales following the Palmer & Harvey failure.

But Naeem Aslam of Think Markets cautions that several rival supermarkets did better:

Looking at competitors such as Sainsbury and Morrison, both have beaten their forecast for Christmas trading. This doesn’t put Tesco in a strong position at all. The retailer which dominates the British High Street needs to make sure that it keeps its tools sharp to fight inflationary pressure by keeping the prices low.

There is no doubt that Tesco has turned the corner and avoided a Debenhams style disaster but it needs to make sure that it stays on track to deliver on its medium-term ambition. This is mainly because the competition is fierce in this space and discounters such as Lidl and Aldi have performed extremely well. Lidl’s Christmas sales increased by 16% and Aldi saw 15%.

Amid the torrent of company news, small UK retailer Card Factory has slipped out a profits warning.

It blames “continue pressure” on its profit margins, plus “wage inflation” and the inflationary pressure from the weak pound.

Shares are down 21% in early trading!

Updated

Here’s my colleague Zoe Wood on today’s retail sales figures:

Tesco and John Lewis have emerged as winners from a tough Christmas trading period as Marks & Spencer reported a downbeat set of figures with a slump in sales of both food and clothing.

The UK’s biggest supermarket chain reported like-for-like sales growth of 1.9% for its UK stores, a performance it said was thanks to the strength of its food business which saw underlying growth of 3.4%.

At M&S, the chief executive, Steve Rowe, admitted there had been a “mixed” performance.

Its like-for-like clothing and homewares sales fell 2.8% while, despite inflation of about 3.7%, sales in its food halls were down 0.4%....

Here’s her full story:

Updated

Tesco and M&S shares fall at the open

DING DING! The London stock market is open...and retail shares are falling.

Marks & Spencer are down 2.4% in early trading, as traders react to its ‘mixed’ Christmas trading figures.

Tesco are being thumped too, down 3.6% despite posting a rise in sales over the festive period. That confirms that the City had hoped for stronger figures from Britain’s biggest supermarket.

Tesco’s Christmas trading figures were dented by the demise of wholesaler Palmer & Harvey.

Palmer & Harvey, which supplied around 90,000 UK shops, collapsed in December with the loss of thousands of jobs.

This left the supermarket giant struggling to get enough tobacco products on the shelves, and apparently knocked 0.5% off like-for-like sales growth [partly explaining why it missed City forecasts].

Tesco’s CEO Dave Lewis says:

Incorporating Palmer & Harvey volumes and complexity during this peak period was challenging, resulting in lost tobacco sales across December and putting further strain into our distribution network, particularly post-Christmas.

Whilst I am pleased to say these challenges have now been resolved, they took the shine off an otherwise outstanding performance for the period as a whole.

Updated

Although Tesco is reporting a “record” Christmas, its shares may actually drop when the stock market opens.

That’s because the City had expected an ever bigger jump in sales.

Some analysts had expected growth of 2.4% or more, not the 1.9% which Tesco actually reported this morning.

Elsewhere, online electrical goods vendor AO World has posted an 11% jump in revenues for the last three months of 2017.

But the company also warns that the UK economic outlook remains uncertain.

No Christmas tears at Boohoo

Online fashion retailer Boohoo.com had a good Christmas

The company, which recently acquired PrettyLittleThing and Nasty Gal, doubled its revenues in the last four months of 2017, in a “in highly successful trading period”.

Mahmud Kamani and Carol Kane, joint CEOs, say:

“We are delighted to report another set of strong financial and operational results, with record sales in the four months to December across all our brands. The Black Friday period was our most successful ever and we traded well throughout the period under review.

Updated

Ouch! House of Fraser has just reported some rather unimpressive figures - which won’t calm fears over its future.

Sales at House of Fraser sales shrank by 2.9% over the six-week Christmas period, a poor performance.

It also says that the first week of the post-Christmas sales was “disappointing”, although things have picked up since.

Last week we learned that House of Fraser is pushing its landlords for a rent cut, and planning to downsize some of its stores.

John Lewis gets Black Friday boost, but inflation hits profits

Onto John Lewis!

They have just reported a 2.5% increase in gross sales over the Christmas period, with takings up at its department stores and Waitrose supermarkets.

Black Friday was a particular highlight - boosting weekly sales by 7.2%.

Sir Charlie Mayfield, Chairman of the John Lewis Partnership, says:

‘We traded well during the Christmas period, with gross sales in the six weeks to 30 December £1,962m, up 2.5% on last year, with 1.4% sales growth in Waitrose and 3.6% in John Lewis.

This was due to the exceptional hard work and commitment of our Partners. We focused on our differentiated product offering, attention to service and strong value proposition, underpinned by our Never Knowingly Undersold promise.

But Mayfield also warns that profits have been hit by rising inflation:

The pressure on margin seen in the first half of the year has intensified because of our choice to maintain competitive prices, despite higher costs mainly due to the weaker exchange rate. This will negatively affect full-year financial results as indicated previously.

M&S has a 'mixed' Christmas

A sign is pictured at a branch of Marks and Spencer supermarket in west London, on January 9, 2018. / AFP PHOTO / Justin TALLISJUSTIN TALLIS/AFP/Getty Images

Marks & Spencer has less to celebrate this Christmas.

Like-for-like sales in the UK fell by 1.4% in the last 13 weeks of 2017. Food sales dipped by 0.4% while clothing sales declined by 2.8%.

Steve Rowe, Chief Executive says:

“M&S had a mixed quarter with better Christmas trading in both businesses going some way to offset a weak clothing market in October and ongoing underperformance in our Food like-for-like sales.

As a result, full year guidance remains unchanged.”

Updated

Tesco’s sales figures in detail....

Tesco's sales figures

Tesco hails record Christmas

A branch of Tesco.

Boom! Supermarket giant Tesco says it has racked up its best ever Christmas.

UK like-for-like sales over the festive period rose by 1.9%, including a 3.4% rise in food sales over the Christmas period.

Tesco says it posted its “biggest ever sales week in the UK”, thanks to a “fresh food market outperformance of nearly 4%”

Dave Lewis, Tesco’s chief executive, is upbeat, saying Tesco is “firmly on track to deliver our medium-term ambitions.”

He says:

“We have continued to outperform the market throughout this period, particularly in fresh food, thanks to our most competitive offer for many years. Our trading momentum accelerated across the third quarter and into December, with the four weeks leading up to Christmas Day delivering record sales and volumes in the UK.

Retail analysts are impressed:

Updated

Financial results are flashing across trading screens in the City....

The agenda: UK retail heavyweights report

Good morning. Today, a blizzard of Christmas trading updates will show how some of Britain’s biggest retailers fared over the festive period.

Marks & Spencer, Tesco, House of Fraser and John Lewis all report results today. Online retailers AO World and Boohoo.com will all jostle for attention, as we try to separate the Christmas crackers from the turkeys.

City analysts are expecting Tesco to do well, while Marks & Spencer may have struggled (if only Meghan Markle had worn that £45 M&S jumper a little sooner...)

In recent days we’ve seen profit warnings from Debenhams, Mothercare and Moss Bros, but decent performances from Next and Sainsburys.

It appears that companies selling food have performed better than non-food outlets, partly because food price inflation has pushed up turnover.

Retailers who resisted slapping ‘sale’ stickers all over their stores have also been rewarded, as colleague Sarah Butler reported earlier this week:

Kate Calvert, a retail analyst at Investec, said the different experiences of Debenhams and Next indicated that clothing chains which held back from early discounting may have fared better.

That may potentially be good news for M&S, which had fewer promotional days in 2017 than the year before, according to Calvert.

But she still expects a “mediocre” performance from M&S with clothing sales at established stores down by 3%. “It will be more like Next than Debenhams,” she said.

While retail specialists plough through these results, economists will be examining new UK credit stats, a healthcheck on Germany’s economy, and the latest eurozone factory output data.

European markets are expected to open a little higher. Last night, Wall Street fell after reports that Donald Trump will soon pull America out of the Nafta trade pact.

Traders will also be watching the US bond market closely, after Treasuries suffered a sharp selloff yesterday.

As the Financial Times explains:

Is the three-decade bond bull market coming to a close? A fierce sell-off in the US bond market abated late on Wednesday but left yields on benchmark government debt at their highest level in nine months. There were signs of this last year but here’s why the sell-off could be very different this time.

The yield of 10-year Treasuries approached levels not seen since the “Trumpflation” retreat nearly a year ago, hitting a nine-month high of nearly 2.6 per cent on expectations that cash freed up by the recent US tax cut will finally help spark higher inflation driven by stronger economic growth.

So, a busy day ahead....

The agenda

  • 9am GMT: German GDP for 2017
  • 9.30am GMT: Bank of England credit conditions survey
  • 10am GMT: Eurozone industrial production stats for November
  • 1.30pm GMT: US initial jobless claims
  • 1.30pm GMT: US producer price index figures

Updated

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MCU Stars Are Spoiler Experts At This Point, But I’m Still Amused By Chris Pratt Evading Avengers: Doomsday Questions
Star-Lord isn't spilling the beans.
Cinemablend
Cinemablend
Val Kilmer set to be be resurrected with AI for new film
As Deep As the Grave, the true story of 1920s archeologists, will bring late actor back with support from his estate
The Guardian - US
The Guardian - US
If you think your toddler’s often ill, you’re right – what going to nursery means for catching colds and building immunity
There’s no nice way to put it: small children are snotty. A research study that tested children for multiple respiratory viruses every week for a year found that under-fives are carrying one or more viruses 50% of the time. A child aged 15 months will have 12-15 colds per year…
The Conversation
The Conversation
Everyday essential or kitchen clutter: do you really need an air fryer?
They’re one of the most-hyped kitchen appliances of the last decade, but are these low-fat cookers worth the cost and counter space?
The Guardian - UK
The Guardian - UK
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