Wednesday, September 20: FTSE and European indices started the day relatively flat, following on from Asian trade as markets awaited the conclusion of the US Federal Reserve’s two-day rates meeting due 2pm ET(1800 GMT). Sterling strength versus both the dollar and the euro was sustained about the higher levels we saw last week, receiving a boost in early morning trade courtesy of consensus-beating UK retail data.

Kingfisher(+5.17%), the DIY retailer was one of the larger movers on the FTSE 100 as it continues to progress towards strategic milestones, despite announcing an interim profit fall attributed to “business disruption” and transformation costs.  Revenue increased 4.5% to £6.0bn, as the interim dividend was nudged 2.5% higher to 3.33p but pretax profit including exceptionals decreased 5.9% to £402.0m from £427.0m.  As the business continues through the second year of a five year turnaround plan, the roll out of a new IT platform, clearing out of old ranges and remerchandising among other factors conspired to suppress profit. Trading troubles seem to have emerged from a surge in consumers hiring professionals for home improvement needs, rather than attempting to ‘do-it-themselves’. These woes were compounded by weak retail sentiment in France and a soft housing and construction sector.

The UK posted consensus beating retail sales data for August with consumers noted as splashing out in department stores, on home improvements, in pharmacies & jewellers and on floor coverings and gasoline. Overall, sales were 2.4% higher than a year earlier, following weak figures in the two months prior as households cut back in response to rising prices. Annual inflation hit 2.9% last month, well above the 2.0% targeted by the Bank of England. The ONS commented that sales would have to increase 2.9% month-on-month in September in order to prevent sales in the third quarter falling lower than they were in the second. Sterling strengthened on the numbers against both the euro and the dollar, before slipping as the day progressed. A wave of optimism also washed over consumer discretionary stocks on the news, which were also helped higher with news from Kingfisher.

Across Europe, indices were mixed  at the close with the FTSE 100 -0.05%, the DAX 30 +0.06% and the CAC 40 +0.08%.