View the article online at http://citywire.co.uk/money/article/a894010
FTSE falls as Next warns of toughest year since crisis
Next highlights bleak plight of retailers, warning year ahead could be 'the toughest we have faced since 2008', weighing on FTSE 100.
The FTSE 100 has fallen into the red, weighed down by a slump in mining stocks and a dive in the shares of Next, which warned it faced the toughest conditions since the financial crisis.
The UK blue-chip index fell 65 points, or 1%, to 6,135, with Next (NXT) the biggest faller, down 8.6% at £60.87, despite posting a 5% rise in annual profit and 5.3% rise in the dividend to 158p.
Investors took fright at the clothing retailer's bleak outlook for 2016, as it claimed that 'the year ahead may well be the toughest we have faced since 2008'.
'Investors will find very few crumbs of comfort in fashion retailer Next's outlook for the coming year,' said Russ Mould, investment director at AJ Bell.
'The group's improved results and increase in its dividend were outweighed by its warning that this year could be the toughest since the financial crisis of 2008. Uncertainty in the global economy is a major factor but there are also concerns that there may be a cyclical move away from spending on clothing.'
Next's warning took its toll on rival retailers. Tesco (TSCO) fell 3.1% to 191.5p, Marks and Spencer (MKS) was down 3% at 400.3p, Sports Direct (SPD) fell 2% to 350.7p and Sainsbury's (SBRY) traded 1.7% lower at 275.9p.
Mining stocks retreated as commodities prices were hit by a rise in the dollar, prompted by hawkish comments from James Bullard, president of the St. Louis Fed.
Bullard highlighted the risk of two rate rises this year, but markets are only pricing in one. The pound fell 0.3% to $1.407 against the rallying dollar.
'A week ago the market was caught by surprise at how dovish the Federal Reserve was with its statement and subsequent press conference from Janet Yellen, which more or less at the time put paid to any thoughts of an April rate rise,' said Michael Hewson, chief market analyst at CMC Markets UK.
'It's taken less than a week for this narrative to reverse, begging the question as to what has changed in such a short space of time to prompt such a change in tone.'
Mining stocks in the red included:
- Anglo American (AAL) -5.6% at 494.4p;
- Glencore (GLEN) -4.5% at 146.5p;
- Antofagasta (ANTO) +3.9% at 463.6p;
- Fresnillo (FRES) -3.8% at 913.5p;
- Rio Tinto (RIO) -3.7% at £18.97;
- BHP Billiton (BLT) -3% at 771.3p.
Emerging market-focused stocks also suffered from the dollar's rally. Standard Chartered (STAN) dropped 450.4p, Prudential (PRU) fell 4.3% to £12.89 and on the FTSE 250, Aberdeen Asset Management (ADN) was down 3% at 262.2p.
Renishaw (RSW) was the biggest 'mid cap' faller, down 9.,5% at £18.54 as the engineering group issued a profit warning, citing a lack of orders from the Far east.
Among 'small cap' stocks, Premier Foods (PFD) gave up some of yesterday's spectacular gains on news of a bid approach from US group McCormick & Co (MKC.N) as Japanese group Nissin Foods (2897.T) snapped up a 17.3% stake.
Shares in BlackRock World Mining (BRWM ) fell 16p, or 6.8%, to 213.4p as the investment trust traded without the attraction of its next 14p dividend.
News sponsored by:
Here at BlackRock, we help investors make more out of commodities with a range of innovative, flexible and resilient investment strategies.
From Brazil and Mexico, to Vietnam and Nigeria, the rapidly developing economies of Latin American and frontier markets, which are some of the smaller, less developed economies in the world, provides investors with a wealth of potential opportunities. Discover why BlackRock's investment trust range is well placed to help you make more of these exciting regions.
In this guide to investment trusts, produced in association with Aberdeen Asset Management, we spoke to many of the leading experts in the field to find out more.
More about this:
Look up the shares
- Next PLC (NXT.L)
- Tesco PLC (TSCO.L)
- Marks and Spencer Group PLC (MKS.L)
- Sports Direct International PLC (SPD.L)
- J Sainsbury PLC (SBRY.L)
- Anglo American PLC (AAL.L)
- Glencore PLC (GLEN.L)
- Antofagasta PLC (ANTO.L)
- Fresnillo PLC (FRES.L)
- Rio Tinto PLC (RIO.L)
- BHP Billiton PLC (BLT.L)
- Standard Chartered PLC (STAN.L)
- Prudential PLC (PRU.L)
- Aberdeen Asset Management PLC (ADN.L)
- Renishaw PLC (RSW.L)
- Premier Foods PLC (PFD.L)
- Lakehouse PLC (LAKE.L)
Look up the investment trusts
Look up the fund managers
More from us
- Mark Slater leads shareholder revolt at Lakehouse
- William Hill shares slump after bad day at the races
- Miners lift FTSE as dollar dives against pound
Tools from Citywire Money
From the Forums
Weekly email from The Lolly
Get simple, easy ways to make more from your money. Just enter your email address below
An error occured while subscribing your email. Please try again later.
Thank you for registering for your weekly newsletter from The Lolly.
Keep an eye out for us in your inbox, and please add firstname.lastname@example.org to your safe senders list so we don't get junked.