- Draghi says Eurozone recovery 'weak and modest'
- BoE, ECB keep rates on hold
- Morrison and Tesco disappoint with Christmas sales
techMARK 2,774.65 -0.25%
FTSE 100 6,691.34 -0.45%
FTSE 250 15,948.97 -0.33%
After a brief stint in positive territory, UK stocks sunk into the red on Thursday markets digested comments from European Central Bank President Mario Draghi.
Sentiment was also dampened by a mixed performance from retailers over the key Christmas period, while caution was setting in ahead of the all-important December jobs report in the US on Friday. Labour-market data continues to be in focus after the Federal Reserve moved to taper its stimulus programme last month in the face of an improved economy.
The FTSE 100 finished 30.44 points lower at 6,691.34, falling 0.45% on the day.
Central banks were in focus today with the Bank of England and ECB both voting to leave interest rates unchanged, as widely expected. However, the following press conference with Draghi garnered the most attention given the surprise dip in inflation to 0.8% revealed earlier this week.
Risks still remain, says Draghi
ECB President Mario Draghi warned today that risks still remain to the Eurozone recovery, including political, economic and financial. He said that the recovery was taking place but is "weak and modest", meaning that the ECB will need to maintain an accommodative stance "as long as needed".
He said that the ECB expects a prolonged period of low inflation before prices begin to gradually rise close to its target of 2%. A drop in inflation to a four-year low of 0.7% in October prompted the ECB to cut rates in November.
However, as Market Analyst David Madden from IG explained: "Equities drift[ed] lower as Mario Draghi fail[ed] to convince the market that he can save the Eurozone from sinking into the abyss."
Draghi attempted to reassure that the situation in the Eurozone was very different from Japanese deflationary environment in the 1990s.
Madden said: "On the surface all seems well in the region, but simply mentioning the Japanese crisis of the 1990's seems to have sent stocks sliding. Mr Draghi tried to reassure the market he has a few cards up his sleeve, but actions speak louder than words."
Retailers in focus
Morrison was a heavy faller after admitting that its sales performance over Christmas was "disappointing" as it warned investors that full-year profits would come likely come in at the bottom end of forecasts. Like-for-like (LFL) sales were down 5.6% over the six weeks to January 5th.
Supermarket peer Tesco also failed to impress with a worse-than-expected 2.4% slip in LFL sales over the festive period. Rival Sainsbury, which said yesterday that LFL sales were flat over the festive season, was also lower.
Even fashion retailer Ted Baker edged lower despite reporting a 18.3% jump in sales over Christmas as it said it was on track to hit full-year targets.
On the other hand, Marks & Spencer's third-quarter sales broadly missed analysts' estimates today, but shares
managed to push higher, helped by comments from Investec which upgraded its rating from 'hold' to 'buy'. The broker said that the business should now become cash generative with the current year being the last year of elevated capital expenditure. "We believe the changing business model is not reflected in current valuation," it said.
Tullow Oil and CRH were also leading the risers in afternoon trade after broker upgrades.
RSA declined after saying that a review by PricewaterhouseCooper found that "inappropriate collaboration" among a number of senior executives in Ireland "undermined control effectiveness over claims". The company also said that it had suffered further weather losses over Christmas that will impact 2013 results.
High Street bookies William Hill and Ladbrokes were among the worst performers after Barclays Capital cut its ratings on the stocks to 'equal weight' and 'underweight', respectively. ARM Holdings was also hit by a downgrade by Deutsche Bank to 'hold'.
The share price of communications technology group Spirent Communications sank sharply after the company confirmed that 2013 revenues would be much lower than the previous year due to slower demand in the US.
FTSE 100 - Risers
Marks & Spencer Group (MKS) 460.90p +3.60%
Tullow Oil (TLW) 845.00p +3.05%
CRH (CRH) 1,625.00p +2.39%
Lloyds Banking Group (LLOY) 85.26p +1.74%
British Land Co (BLND) 633.00p +1.44%
ITV (ITV) 199.30p +1.32%
BT Group (BT.A) 384.00p +1.29%
Associated British Foods (ABF) 2,550.00p +1.27%
easyJet (EZJ) 1,646.00p +1.23%
Whitbread (WTB) 3,884.00p +1.20%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 234.50p -7.75%
William Hill (WMH) 371.10p -7.18%
ARM Holdings (ARM) 997.50p -6.51%
Aberdeen Asset Management (ADN) 449.60p -5.01%
Randgold Resources Ltd. (RRS) 3,608.00p -3.45%
Rolls-Royce Holdings (RR.) 1,248.00p -2.95%
Anglo American (AAL) 1,226.50p -2.85%
RSA Insurance Group (RSA) 97.95p -2.73%
Fresnillo (FRES) 674.50p -2.53%
Sainsbury (J) (SBRY) 351.40p -2.39%
FTSE 250 - Risers
Laird (LRD) 317.10p +12.13%
Restaurant Group (RTN) 629.00p +5.71%
Perform Group (PER) 235.70p +5.22%
FirstGroup (FGP) 134.90p +3.37%
Pace (PIC) 352.10p +3.04%
Merlin Entertainments (MERL) 377.50p +3.00%
Thomas Cook Group (TCG) 176.70p +2.91%
PayPoint (PAY) 1,048.00p +2.75%
Hansteen Holdings (HSTN) 113.40p +2.62%
Drax Group (DRX) 817.50p +2.57%
FTSE 250 - Fallers
Spirent Communications (SPT) 85.90p -13.54%
Ladbrokes (LAD) 164.10p -8.68%
Polymetal International (POLY) 528.00p -7.69%
Centamin (DI) (CEY) 44.40p -4.50%
CSR (CSR) 632.50p -4.31%
African Barrick Gold (ABG) 190.00p -4.19%
Imagination Technologies Group (IMG) 161.90p -4.14%
Oxford Instruments (OXIG) 1,748.00p -3.64%
Ted Baker (TED) 2,230.00p -3.04%
Tullett Prebon (TLPR) 365.30p -2.97%