The kneejerk positive reaction to the end of the US government shutdown has died down so European stocks have a weaker tone on Wednesday. Big upcoming macro events including the European central bank’s latest monetary policy decision are another source of caution.
FTSE dips before UK unemployment figures
The FTSE 100 looks soft, especially in comparison to Germany’s DAX, which hit new record highs on Wednesday. The strength of Sterling, particularly against the dollar (GBP/USD > 1.40) is a clear headwind to more gains for UK share prices. Whether Sterling can sustain its recent surge may rest on today’s UK employment figures. With the unemployment rate at four-decade lows, the average earnings figures could have more weight for markets. Inflation fell last month so wage growth only needs to hold steady to reduce the pinch on consumer pockets and help the growth outlook.
WH Smith’s Labybird sales fly away home
WH Smith (LON:SMWH) shares have fallen following flat Christmas sales growth. The firm blamed a fall in like-for-like high street sales on a weaker performance of literary parodies such as Ladybird’s For Grown-Ups series. With most book sales shifting online, high street sellers need a big trend to boost sales and 2017 had nothing to offer. Another strong period for WH Smith’s travel business based at airports and train stations helped offset the difficulties on the high street.
Training costs mean Sage takes a stuffing
Software giant Sage Group PLC (LON:SGE) reported another strong quarterly rise in sales, but the shares fell since the figures came in slightly below expectations. An increase in sales training costs seems to have distracted from the business of selling software. Investors aren’t convinced by Sage which has kept FY 2018 guidance despite the blip. Sage may be reaching the twilight of investor optimism about its conversion to a cloud-software business.
Commodity producers drop
Antofagasta (LON:ANTO) shares were amongst the biggest fallers on the FTSE 100 after reporting production data. Gold and copper output fell in the fourth quarter, which weighted on full-year production. Gold output was down a dramatic 21.6% in 2017 over the previous year and underpins what looks like a constructive supply outlook for the price of the precious metal.