Thursday, 4th January: As far as bank holidays go, the Japanese have had their fair share already, extending the New Year celebrations and only returning to work today. Not to lose ground though, the Nikkei got 2018 off to a flyer, reopening overnight and marking the new year with a new 26-year high as financials, technology and automakers drove the Nikkei 3.26% higher, giving the index its largest daily gain since November 2016.
The Services PMI announced this morning rounds off a hat trick of UK data this week. The December reading came in at 54.2, up from 53.8 in November and going against expectations of a forecast slowdown. Reports from the services industry suggest economic growth of 0.4-0.5% in the final three months of 2017, making it the strongest quarter of growth in the UK economy last year.
After yesterday’s surprise rise in sales announcement from Next, Debenhams failed to carry the momentum forward and instead disappointed investors with a profit warning, sending the shares more than 20% lower in early trading. A tough festive period for the department store resulted in the first week of its post-Christmas sales missing expectations with like-for-like sales in the UK falling 2.6% in the 17 weeks to 30 December. Subsequently, pretax profit for the year to September is expected to between £55-£65m, vs £59m for their 2017 financial year. The shares slightly to end the day lower by 14.73%.
German discount retailer Aldi has reported record sales in the UK and Ireland over the Christmas period with sales rising by more than 15% in December, passing the £10bn mark for the first time. The sales growth has been driven by a 30% surge in the retailer’s premium Specially Selected ranges as customers switched from more expensive food retailers. The group now have 762 stores in the UK and Ireland and will be giving staff a 3.75% pay rise to £8.85 a hour nationally (£10.20 in London, +4.6%) from 1st February.
Scroll back to our blog on 4th January 2017and you notice we are about to repeat ourselves (slightly) as today is “Fat Cat Thursday”: the UK’s top bosses will have earned more than the average worker earns over the course of the year by the end of business today. An average chief executive earns 120x more than average full-time worker, although the average pay has fallen from £5.4m to £4.5m. The average UK salary is £28,758 according to the High Pay Centre and means UK bosses need to work 32 hours to reach the median full-time employee salary (assuming executives work 12 hour days, most weekend and take 19 days holiday a year).
Across the pond the Dow Jones has broken above 25,000 for the first time as the US private sector added 250,000 jobs in December. The Dow only broke above 24,000 for the first time at the end of November, just 35 calendar days ago. The S&P 500 and Nasdaq have also continued to push to all time highs (we know we say this a lot).
In the UK the FTSE closed at record highs of 7,695.88 while there was strong positive sentiment across Europe with the CAC 40 closing +1.55% and the DAX +1.44%.