Wednesday, 3rd January: The first of the UK retailers announced Christmas (ish) trading this morning, with Next reporting a surprise rise in sales, helped by the cold weather in the lead up to Christmas. Total sales have risen 1.5% in the 54 days to December 24th with online sales rising 13.6% to offset a 6.1% decline in store sales. The group now expect annual profits to rise by £8m, although continuing to warn that subdued consumer demand and lower spending on clothing would persist over the coming year. Shares rallied at the open, surging to the top of the London index, paring back slightly over the course of the day. The optimism from Next’s results was felt by other retailers in the UK with Brown (N) Group adding more than 7% and JD Sports adding 3.1% at the close. Next closed the day +6.67% after opening up >9% higher.
Markets in Financial Instruments Directive II, also known as MiFID II has been launched today, the biggest EU regulation change in decades. The rules have taken nearly 8 years to design, although the launch is a year behind schedule as companies have been implementing new technology to implement the regulations. It has been launched with the aim of increasing transparency, improve investor confidence and strengthen the industry and is an attempt by the regulator to shine a deeper light on how and when assets are traded, allowing regulators to spot “bubbles” earlier to avoid a repeat of the financial crisis. Anyone trading in stocks, bonds, foreign exchange, commodities or exchange-traded funds (ETFs) will be affected, ultimately making everyone in the investment chain accountable for what they do.
UK construction data was announced this morning, with the PMI reading falling from 53.1 in November to 52.2 in December. Sterling barely reacted as the survey showed new orders to be rising to a 7 month high while job creation was at its strongest since June, although the pound continued to fall over the course of the day.
European stock and bond volumes were lower in trading today as firms got to grips with the newly introduced MiFID II regulations. The FTSE 100 and 250 both closed +0.3% while the positive sentiment was felt more so across Europe with French equities +0.81%; German equities +0.92%. US indices were once again on track for further record highs at the time of writing.