Banks pull FTSE to another two-year high

A late-afternoon spurt saw the FTSE 100 close at another nearly 24-month high on Thursday as big financial companies led the way.

The rise came despite heavy falls in the retail sector, as JD Sports and Next closed down more than 6% and 4% respectively.

“European markets have had a steady day, taking a pause after the gains of the past couple of days, as investors mull over the latest inflation numbers that we’ve seen from China and the US over the last 24 hours,” said CMC Markets analyst Michael Hewson.

“These inflation numbers, from both countries, would appear to give the impression that we could be near a short-term peak on this current inflationary surge, and while no-one is suggesting that we will see a sharp reversal from current levels, perhaps we may have reached a near term top.”

Prudential, Barclays, HSBC and Standard Chartered made the top of the FTSE, while some miners, including Glencore, joined them on the list of the day’s winners.

Between them they helped the FTSE stay at its highest levels since January 2020, as the world was only just learning about Covid-19 for the first time.

In the first two weeks of the year the index has gained more than 2%, outperforming many international peers.

In the US, the Dow Jones had gained 0.6% and the S&P 500 dropped 0.1%, Germany’s Dax was flat while the Cac 40 in Paris lost 0.5% of its value.

Sterling dropped 0.1% and by the end of the day one pound would buy 1.3728 dollars or 1.1977 euros.

“Today we’ve taken a bit of a pause with the FTSE 100 and Dax both treading water for the most part, trading either side of the flat line, with the focus on more decent trading updates from the retail sector, although to look at the share price reaction, you’d have been forgiven for thinking they weren’t that great, although they could always have been better,” Mr Hewson said.

Marks & Spencer was one of the retailers to report after what it called a “strong” Christmas as sales rose 8.6% in the three months to the end of the year.

The outstanding performer was the food business but its clothing and home unit also reported a jump in sales, despite the pressures that Omicron put on retailers.

Some of this was down to online orders which grew robustly as shoppers turned to the website for Christmas presents.

But M&S’s shares were not boosted by the news, as they ended the day down 7.9%.

“It has in fact been a day of decent quarterly numbers for UK retail, not that you’d know it, with both Tesco and Marks and Spencer share prices slipping back, although this could simply be a case that expectations were perhaps a little bit too high leading into the numbers, and there are concerns as we head into the final quarter, for both, that cost-of-living pressures might impact their final Q4 numbers, heading into the spring,” Mr Hewson said.

For Tesco the drop was less severe, down 1.2%.

The company said that like-for-like sales rose by a third of a percent in the six weeks to January 8. New restrictions helped the food retailer boost sales.

It sees Tesco build on last year’s lockdown-induced growth and the Christmas period was 8.8% better for the retailer than 2019.

But this rise, and even a profit upgrade, did not please investors.

Asos’s shares however gained more than 11% on the back of a strong performance in the UK – sales rose 13% in the four months to the end of December.

The online fashion seller also grew in the US, though lost ground in Europe due to strict lockdowns in several of its European markets.

The biggest risers on the FTSE 100 were Prudential, up 38p to 1,337p, IAG, up 4.38p to 165.52p, Barclays, up 5.3p to 217.1p, HSBC, up 11.8p to 513p, and Standard Chartered, up 10.8p to 336.6p.

The biggest fallers on the FTSE 100 were JD Sports, down 14p to 197.95p, United Utilities, down 153p to 2,977p, Next, down 330p to 7,672p, Spirax-Sarco, down 595p to 13,900p, and Halma, down 113p to 2,780p.