The FTSE 100 is higher by around 20 points on the day with the benchmark attempting to make another break to the upside and trading within striking distance of its all-time high. The index has been supported by a small slide in the pound, with Sterling falling back towards the 1.35 handle against the US dollar to trade not far from its lowest level of the year.
Morrison’s results lift supermarket shares
A strong sales performance in the pre-Christmas period has boosted the stock of Morrisons (LON:MRW), with shares higher by almost 2% on the day. The impressive trade done ahead of the festive period played a key role in the 3.7% rise in sales seen for the six weeks to January 7th with a deal to supply convenience store operator McColl’s and the ongoing recovery of its own supermarkets the main contributing factors. The trading update has boosted other shares in the sector with Marks and Spencer (LON:MKS) actually rising by more than Morrisons in gaining around 3.5% ahead of the release of its own festive results on Thursday. Sainsbury's (LON:SBRY) is also making strides higher but Tesco (LON:TSCO) is the odd one out in trading lower by around 1% despite industry data suggesting that it was the best performer of the “big four” over the festive period. Tesco enjoyed the largest sales growth amongst its peers during December according to figures from Kantar Worldpanel and today’s decline is likely to be simply a case of profit taking after a strong run higher of around 25% in the past 6 months.
Eurozone unemployment falls to lowest level this decade
The strong economic data from the Eurozone keeps on coming with the latest figures on the unemployment rate falling to their lowest level since January 2009. The reading of 8.7% for November marks a 0.1% drop on the prior reading and continues the solid downtrend for this indicator seen since the peak of 12.2% in late 2013. The most recent German industrial production numbers have also been released this morning and there’s more good news here, with the 3.4% rise M/M beating forecasts and marking a large increase on the prior reading of -1.2% - which itself was today revised higher from -1.4%.
Despite these buoyant economic indicators the single currency has fallen with the EURUSD rate dropping to its lowest level in 2 weeks to trade in the low 1.19s. This could well be down to the extreme level of speculative positioning in the Euro with the latest CFTC data reporting its highest level of net longs on record.
What this means is that the long Euro trade is becoming increasingly crowded which suggests there may not be that much additional buying pressure to come should Euro positive events occur, and furthermore, that there could be a swift swoon lower should the outlook for the single currency sour as hedge funds rush for the exit door to cover their long positions.