German GDP disappoints, UK retail and miners in focus
Equity markets across Europe were trading fractionally lower this morning, on the back of annualised 2012 German GDP numbers coming in slightly worse than expected at 0.7%, missing estimates of 0.8%. This is a marked slowdown from 3% growth in 2011, although is hardly surprising given the tough environment in the Eurozone.
UK inflation remains unchanged at 2.7% and the UK retail sector remains very much in focus this morning with more Christmas numbers filtering through to retailers share prices.
Following Jessops, HMV has become the second specialised retailer in as many weeks to call in the administrators. 4,000 jobs are now at risk, unless administrators Deloitte can find a buyer, with trading expected to continue at its 230 stores in the near term. Whilst the writing was on the wall for the retailer for some time with its battered share price and following the announcement in early December 2012 that it was likely to breach its banking covenants, the situation highlights the current difficulties for UK high street retailers.
Despite this, there have been brighter elements today with Burberry Group beating analysts revenue forecasts in the three months to December 31, weighing in at £613 million, compared to forecasts of £602 million and £574 in the same quarter last year. Bank of America Merrill lynch also upgraded the stock to buy from neutral, and highlighted the potential for a share buyback. The stock was up over 5% in early trading, hitting a new 6 month high of 1,419p.
Online grocer Ocado also benefitted from better than expected festive figures, posting a 14.2% rise in gross sales, year-on-year.
ARM Holdings, the mobile chip firm, following the sell-off in Apple yesterday is suffering after reports of weaker than expected demand for its new iPhone 5 handset. The stock was also cut to equalweight by Morgan Stanley. The Premium Client desk at CMC have seen flow in this, with more than 95% of CMC clients currently holding short positions.
Rio Tinto announced plans to increase iron ore output by 15% this year in response to signs of an improvement in demand from China, helping miners to provide the biggest support to the UK FTSE 100 index.
Producer Anglo American Platinum, majority owned by Anglo American Plc and responsible for some 40% of the worlds platinum production capacity, announced this morning that they would cut output in its mines driving the metal to 3 month highs. This has helped push Lonmin and Aquarius Platinum higher, both up around 4% in early trading.
Movers to the downside this morning include Punch Taverns, despite sector competitor Greene King reporting positive end of year numbers yesterday.
Markets will look ahead to US retail sales for December released today, expected to show only a small rise of 0.2%, down from November’s 0.3% rise.