FTSE 100 hits highest level in more than four years after more retail cheer

The FTSE 100 has hit its highest level in more than four years as unexpected good news across the retail sector continues to give the UK’s leading index a new year boost.

The index hit a high of 7,772.37 points during the day on Wednesday, the highest level since August, 2018.

It was just more than a dozen points shy of the 7,790.17 points recorded on August 10, 2018, and has soared to levels not too far off its all-time highs.

Several retail giants have so-far given positive trading updates from over the Christmas period, suggesting that consumers had more spending power and appetite for shopping than many analysts and experts had previously predicted.

On Wednesday, sportswear group JD Sports upgraded its full-year profit guidance after cheering an “impressive” sales performance over the festive period.

Its appeal to younger consumers with fewer financial burdens sheltered the company from wider cost-of-living impacts, it said.

Shares in the retail giant jumped by nearly 7%, more than offsetting significant insurance losses on the FTSE 100.

The FTSE 100 closed 0.4% higher, or 30.49 points, at 7,724.98, reversing the short-lived declines recorded on Tuesday, and the highest close since August 2018.

Michael Hewson, chief market analyst at CMC Markets UK, said: “For all the doom and gloom leading up to Christmas and the end of the year period, it would appear that while consumers are becoming choosier about where they spend their money, they are still spending it.

“Milder weather in January also appears to be helping sentiment, fueling optimism that the start of 2023 might offer some respite from further increases in energy prices.

“Last week, Next surprised the markets with a positive pre-Christmas trading update. Today JD Sports has carried on that positive vibe with a similarly robust trading statement.”

Germany’s top index, the Dax, has also been on a winning streak so far this year. It closed up a significant 1.17% on Wednesday. While the French Cac enjoyed a 0.8% lift.

US stocks started the day on a positive footing, with the S&P 500 up 0.56% and Dow Jones 0.24% higher when European markets closed.

The pound was relatively flat against the US dollar, trading around 0.1% lower at 1.2134, and was down 0.25% against the euro to 1.1285.

In company news, there was more good news in the retail sector with Sainsbury’s hailing a “record” Christmas sales period, despite the pressure on shoppers from the rising cost of living.

The UK’s second largest supermarket chain said that its profits were on track to meet the upper end of market expectations following the increased volume of sales.

Nevertheless, its shares were down 1.6% at close.

There was a gloomier update from Direct Line Insurance, which revealed it had scrapped its shareholder dividend after last month’s freezing weather had led to an increase in motor cover claims.

Its share price plummeted by 23.5%, and it prompted a sell-off of other big insurers such as Admiral Group and Legal & General, which also saw their share prices fall on Wednesday.

Meanwhile, the boss of housebuilder Barratt Developments noted a “marked slowdown” in the UK housing market over the past six months, leading it to cut back significantly on purchasing new land and pausing recruitment of new employees.

Investors were relatively unfazed by the warning and its share price dipped by just 0.17%.

The biggest risers on the FTSE 100 were JD Sports, up 9.85p to 150.75p, Frasers Group, up 29p to 751p, St James’s Place, up 45.5p to 1,195p, Segro, up 27.2p to 818.2p, and Unite Group, up 29p to 955.5p.

The biggest fallers on the FTSE 100 were Admiral Group, down 155p to 2,117p, M&G, down 5.75p to 190.8p, Legal & General Group, down 6.1p to 252.2p, Aviva, down 9.7p to 448.7p, and Smith & Nephew, down 21.5p to 1,161p.