FTSE 100 flatlines in first full week of trading in 2014 as supermarkets disappoint

10th January 2014

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After rising by more than 14% in 2013 the FTSE 100 index fell flat in its first full week of trading in the New Year as market updates from UK supermarkets disappointed traders writes Philip Scott.

While the blue chip index notched up a near 1% rise on Friday to close at 6,739.94, over the week it struggled to make any significant progress after limping ahead by just 0.19%.

The past week saw British supermarkets update the market with disappointing results as the likes of Morrison and Tesco felt the pressure from their discount competitors such as Aldi and Lidl over the Christmas period.

Morrison, down 9% over the week to 236.1p, endured a 5.6% sales plunge in the six weeks to 5 January while the UK’s biggest supermarket chain, Tesco, 3% lower at 321.8p, said it suffered another heavy decline in underlying sales in its primary UK market over the festive season, as sales slid 2.4%, in the six weeks to January.

In addition Marks & Spencer reported that sales declined for the tenth consecutive quarter but it bucked the trend, as brokers remained sanguine regarding its report, as the business firmed 6% to 468.8p.

For its part Sainsbury’s, also suffered a stumble over the week, loosening 7% at 346p, after it reported that sales in the fourteen weeks up to 4 January rose by just 0.2%, just edging ahead of the consensus forecast

But the steepest faller over the week was Mexican miner Fresnillo, off 12% at 679p, after analysts at Barclays downgraded the company from overweight to equal weight.

Also enduring a fall was iPhone chip designer ARM Holdings, down 11% to 972p as brokers at Deutsche swung from a ‘buy’ to ‘hold’ recommendation.

Enjoying a far better start to the year was house builder Persimmon. Buoyed by the UK housing market renaissance, it jumped 8% to 1,354p, making it the highest riser over the week, after reporting an expectation beating 21% leap in full year revenues.

Despite facing a possible fine of £35m from the Irish regulator due to the £200m losses uncovered at its Irish operations, troubled firm, RSA Insurance managed a 7% climb over the week to close at 98.35p.

Tullow Oil, delivering a market update next week, also enjoyed gains, after firming 6% to 909.5p as did Aviva, also 6% better at 469.9p. Among the UK banks the majority state-owned Royal Bank of Scotland, finished 4% ahead at 356.9p, while Barclays and Lloyds Banking group also gained 4% apiece to finish at 283.6p and 83.04p respectively. HSBC managed a 3% increase to close at 675.6p.

Next week sees updates arrive from among others turf accountant William Hill and fashion house Burberry.

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