European stock indices pause for breath on Wednesday
City Index January 4, 2012 2:00 PM
<p>The FTSE 100 traded largely flat within the first hour of trading on Wednesday after a 2% rise yesterday, with many traders pausing for breath […]</p>
The FTSE 100 traded largely flat within the first hour of trading on Wednesday after a 2% rise yesterday, with many traders pausing for breath ahead of a German bond auction later today and the arrival of the latest set of US jobs data at the end of the week.
By 9am, the FTSE 100 had risen a mere two points to trade at 5702 whilst the German DAX and French CAC indices suffered losses of 0.5%.
Banking stocks were a key drag on the FTSE 100, countering any gains the UK index could have made from a positive performance in oil stocks, which were led chiefly by BP. The FTSE 350 banking sector lost 1% in early trade, dragging on a 0.9% gain in energy stocks, leaving the FTSE 100 largely unchanged on the day.
BP shares topped the FTSE 100 best performers on the day, rising 1.5% for the heavyweight stock after India’s regulator approved Reliance Industry’s $1.53 billion plan to develop four satellite fields, in which BP is a partner. The move could end a long running uncertainty for Reliance and if true may pave the way for final government approval.
On the downside were shares of Next, after the retailer disappointed somewhat with its trading update for the run up to Christmas. The retailer reported a rise in total sales of 3.1%, below the median of analyst forecasts for a 3.4% rise. Concerns increased for many other UK high street retailers given the fact that Next high street store sales dropped 2.7%. Despite the fall in high street sales, online directory business generated a 16.9% sales increase, emphasising the importance of online sales in the retail sector.
An important caveat on this update is the fact that weaker than expected like for like sales are being compared to a fairly poor run up to Christmas in 2010 after the dreadful weather conditions in the UK in November and December in 2010. This perhaps adds even more disappointment to today’s figures. Next was also fairly bleak in its outlook, which weighed on the share’s performance.
In terms of economic data, traders will likely keep a close eye on inflationary data out of the eurozone at 10am and US factory orders which are due out at 3pm GMT.
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