Little cheer on first day of trading
Debenhams claws back losses as market jitters continue
Debenhams shares were sharp fallers in early trade
The first day of trading in the new year got off to a jittery start with the London market dragged down in early trade by miners and a sharp fall in Debenhams shares.
Only two FTSE 100 stocks – Next and Imperial Brands – were higher in the first hour, with Debenhams down 10%. The retailer later recovered to close 2.24% higher.
The blue chip index also clawed back losses during the day. The FTSE 100 closed up 6.1 points (0.1%) at 6,734.23. The FTSE 250 ended 84.7 points or 0.5% ahead at 17,586.70.
Commenting on nervousness around Debenhams, Russ Mould, investment director at AJ Bell, said: “Pictures on social media of the retailer’s messy shelves and the usual widespread discounts on goods people don’t really want in the first place would suggest that Debenhams continues to be stuck in a rut.
“A trading update expected on 10 January should give the market some answers although expectations remain low for the business to deliver good news.
“Debenhams hasn’t updated on trading since 25 October and we know from many of its competitors that November was a terrible month for retailers and December is also likely to have been a struggle.
“Debenhams is now worth a mere £57m which is astonishing for a business that generated more than £2 billion of sales in its past financial year.
“The UK winner of the £115 million EuroMillions jackpot on New Year’s Day could buy Debenhams and still have half their money left over.
“However, it seems fair to suggest that wouldn’t be the best way to spend their winnings given the company is drowning in debt and has a business model which is increasingly irrelevant in the modern world of retailing.”
John Lewis’ higher sales in the week ending 29 December offered some relief to the retail sector. Britain’s biggest department stores operator is the first retailer to update on trading at year-end, said demand had been “very strong” on Christmas Eve. Next, which publishes an update tomorrow, was top of today’s winners with a 4.6% rise to £41.77.
A slowdown in China’s manufacturing sector added to investor concerns about a global economic slowdown in 2019, leading to weakness across European markets.
Oil prices were down in early trade by more than 1%, pulled back by surging US output and concerns about an economic slowdown in 2019 as factory activity in China contracted.
Brent crude futures were at $53.05 per barrel, down 1.4% from their final close of 2018. Meanwhile, West Texas Intermediate was at $44.83 per barrel, down 1.3%.
Better news on the homes front as the number of first-time buyers getting on the property ladder with a mortgage in the last 12 months was at its highest level since 2006, according to estimates from Yorkshire Building Society.
Across the UK, 367,038 first-time buyers secured mortgages in 2018, up from 362,800 in 2017. The figures suggest first-time buyer levels now represent half of all homes bought with a mortgage.