U.K. stocks were heading for a fresh record on Thursday, led higher by tobacco and mining companies boosted by a weaker pound and a rise in metals prices.
Supermarkets, however, curbed gains for the London benchmark after disappointing trading updates from retailers Tesco and Marks & Spencer covering the crucial Christmas sales period.
What is the market doing: The FTSE 100 index
added 0.2% to reach 7,760.64, on track to take out the record close of 7,748.51 set on Wednesday.
dropped to $1.3475, compared with $1.3508 late Wednesday in New York. The pullback came as the dollar recovered from jitters about whether China will slow its purchases of U.S. government bonds.
What is driving the market: While other global markets have taken a breather from their recent rally, the FTSE has continued to keep a toehold in record-setting territory. On Thursday, the action in London was focused on sectoral moves.
Miners helped lift the benchmark on Thursday, as copper prices
gained for a second straight day and inched closer to a four-year high.
Heavyweight tobacco companies also lent a helping hand, getting a boost from the drop in the pound. Tobacco companies generate the majority of their sales outside the U.K., so weaker sterling lifts their earnings when translated back into the U.K. currency.
Supermarket sweep: Shares of Marks & Spencer Group PLC
slid 3.4%, after the retailer and supermarket chain said like-for-like total U.K. sales declined 1.4% in the 13 weeks to Christmas. Like-for-like food sales fell 0.4%, while clothing and home sales dropped 2.8%.
“There is no repackaging these figures as anything short of very disappointing. Food is the worry — it’s been the easy win for M&S for years but suffered a 0.4% like-for-like decline,” said Neil Wilson, senior market analyst at ETX Capital, in a note.
In the same vein, Tesco PLC
lost 2.8%. The company, Britain’s largest supermarket chain, said it’s confident in its outlook for fiscal 2018 after like-for-like U.K. sales rose 1.9% during the Christmas period. However, the general merchandise business and slower tobacco sales dragged on total performance, leaving analysts overall disappointed.
“Looking at competitors such as Sainsbury and Morrison, both have beaten their forecast for Christmas trading. This doesn’t put Tesco in a strong position at all,” said Naeem Aslam, chief market analyst at Think Markets, in a note.
Shares of Barratt Developments PLC
slid 1.6% even after the home builder said it had a strong performance in the first half of fiscal 2018.
On an upbeat note, distribution and outsourcing company Bunzl PLC
gained 1% after saying it is taking over U.S. workplace safety company Revco as well as U.K. catering equipment business Aggora Group. It also said it received a binding offer to sell its OPM business in France.