John Dance

Member Article

Christmas food sales help M&S

Reporting seasons in the US traditionally starts with the financial results of Alcoa Inc, the largest
US aluminium producer, and it did not deviate from this position in last night’s 2011 4th quarter
earnings. The results were mixed, with the first quarterly loss in more than 2 years already forecast
by analysts following a reduction in the price of the underlying metal. Despite this, sales were up and
the company was bullish on its outlook for 2012 as increased demand and production cuts will lead
to an aluminium market deficit, and hence firmer prices. The news buoyed European equities, with
major indices opening up around 1% higher this morning.

Economic data out of China showed a slowdown in trade and in particular weaker than expected
import growth, leading some to believe that this increases the likelihood that the Chinese authorities
will ease monetary conditions which will boost domestic markets. Combined with the Alcoa
earnings, this led to a increase in risk appetite that saw commodities and equities lift. Of the latter,
banks and miners were particularly buoyant and populated the leading positions of the FTSE 100.

It was evident form a company report that strong food sales were sufficient to offset weak trading
in other departments in Marks and Spencer over the Christmas period. Overall sales for the last 13
weeks of the year were up 0.5% compared to last year, with food increasing 3%. Despite much of the
growth coming from promotions (which will hurt profit margins) and a cautious 2012 outlook from
CEO Marc Bolland, shares reacted well to post a 3.0% gain to 317.7p by the end of trade.

The index itself gained ground gradually throughout the day and finished 1.5% higher at 5697. This
underperformed the CAC and DAX that posted gains of 2.7% and 2.4% respectively, whilst US indices
were around 1% higher at the time of writing.

This was posted in Bdaily's Members' News section by John Dance .

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