European indices mixed; retailers surge on Next profits
City Index May 4, 2011 7:15 PM
<p>European indices traded mixed on Wednesday as London traders continued to bank profits ahead of the BoE rate announcement tomorrow, whilst the DAX and CAC […]</p>
European indices traded mixed on Wednesday as London traders continued to bank profits ahead of the BoE rate announcement tomorrow, whilst the DAX and CAC posted gains of 0.3%.
The FTSE 100 fell by 0.4% in trading, having initially fallen almost 1% in early trading after being weakened by selling in the three main heavyweight sectors: miners, banks and oil firms. Much of this selling is based on investors taking profits off the table after a recent strong run in equities, particularly with the Bank of England interest rate decision tomorrow and US non-farm payrolls due out on Friday.
Copper prices have dropped for a fifth consecutive session which is also tampering demand for mining stocks today. Antofagasta shares have borne the brunt of the selling in the mining stocks today after shareholders were left unimpressed by the firm missing its output target in the first quarter. Copper production came in below target by 29,000 tonnes and the company also cut its full year target for its Los Pelambres mine.
Next sales trigger bullish retail sectorIt is however strong buying in the retail sector, triggered by solid earnings at Next, that has kept the FTSE from more graver falls with shares of Next and Marks and Spencer’s lifted by between 3%-4%. The retail sector as a whole has been turbocharged by Next’s earnings. The high street retailer beat sales forecasts for the quarter with sales growing at a rate of 5.2% as the company received a boost from the hot weather over Easter.
These earnings, particularly in the context of an extremely cautious outlook for Britain’s retailers in a tough consumer climate, is pleasing for shareholders and helped to push Next’s shares price even higher after a strong eight-week performance.
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