Less than a week after the death of Qassem Suleimani, it seems that both the US and Iran might be stepping away from the escalation threatened in the aftermath of the assassination.
Following on from the missile attack on US bases in Iraq – an attack that thankfully didn’t cause any casualties – Donald Trump gave a press conference on Wednesday stating ‘Iran appears to be standing down’. More importantly the President’s speech was less full of sabre-rattling than his recent tweets, saying that the fact America has such a sizeable military ‘does not mean we have to use it. We do not want to use it.’
With all this echoing Iranian foreign minister Javad Zarif’s comments following the missile strike, the markets were able to enter recovery mode. The DAX, which has seen some wild swings in the last few sessions, climbed 180 points to cross 13500 for the first time in almost 2 years, while the CAC’s 0.7% increase pushed it to 6070. As for the FTSE, a half a percent jump sent it above 7600, but left it shy of its recent Boxing Day peak. Looking ahead to this afternoon and the Dow Jones could strike a fresh all-time high, the futures currently pencilling in a 150 point rise.
Beyond the apparent cooling of US-Iran tensions, Thursday was a busy, bad morning for UK retailers. Despite eking out a 0.2% rise in Q3 like-for-like sales, ‘disappointing one-off issues’ caused Marks and Spencers (LON:MKS) to lower its full year gross margins guidance, sending the stock 7.5% lower in the process.
Though less severe than the declines seen at Aldi, Morrisons (LON:MRW) and Sainsbury's (LON:SBRY), like-for-like UK sales at Tesco (LON:TSCO) nevertheless fell 0.2% for the 19 weeks to January 4th. However, overall UK sales nudged 0.1% higher, sending the supermarket up 1.7% to £2.55.
Offering an increasingly obsolete product, Card Factory (LON:CARDC) was perhaps the worst hit on Thursday. Like-for-like group revenue dropped 0.6% for the 11 months to the end of 2019, leading the retailer to lower its full year profit forecasts after a ‘softer than anticipated Christmas trading period’. This in turn sent the stock plunging 17%, taking it to an all-time low of £1.15.
Perhaps surprisingly, one of the few companies to truly buck the bleak retail trend in the UK – sales in the country fell 0.1%, making it the worst year on record – was Dunelm (LON:DNLM). The home furnishings firm is expecting a near 20% rise in first half earnings, in large part due to its avoidance of heavy discounting over the Black Friday/Christmas period. That sent the stock 2.5% higher, leaving it in the vicinity of its all-time highs.
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