This morning has seen the UK report its retail sales figures for October and they’ve come in far above analysts’ consensus forecasts. The 1.9% increase m/m represents the second highest this year and the largest rise since the EU referendum. Whilst this is clearly a positive data point for the underlying economy, investors should heed some caution before reading too much into the release. This indicator is sensitive to the strength of sterling and the large declines seen in the currency last month - including the flash crash - will have boosted international consumer spending on these shores, and may mean the jump is a little misleading. This reading is viewed as a good indicator of economic health as it is believed to show spending habits of UK citizens - which is assumed to reflect their prosperity - and therefore if the rise is largely due to a fall in the pound, using this data to suggest strong economic performance is possibly a case of drawing an incorrect conclusion.
FTSE gains as Miners rise
The FTSE 100 is higher by around 20 points at the time of writing, with mining stocks leading the attempted recovery following yesterday’s declines. Randgold Resources (LON:RRS) is the best performing stock on the benchmark - higher by more than 2.5% - with Anglo American (LON:AAL), Glencore (LON:GLEN) and BHP Billiton (LON:BLT) not far behind. Outside of the blue chip index Majestic Wines has gained in early trade after reporting a 13% jump in sales for its fiscal first half of the year. The report is overtly confident and Majestic will feel it has turned a corner following a profit warning in September, with the reinstatement of a dividend and more optimistic outlook being warmly greeted by investors.
Royal Mail (LON:RMG) falls despite posting solid results
The biggest laggard on the index is Royal Mail which has seen its stock off by almost 5%, despite posting an increase in both revenue and profit in its latest trading update for the 26 weeks to 25th September. The increase in the earnings per share and dividend make for a decent overall set of results, but the share price has taken a hit this morning as the firm continues to press ahead with its cost-cutting measures. Investors will view the upcoming crucial Christmas period as pivotal in determining the 2016 performance and hope that the postal service company, celebrating its half-millennium, can deliver more positives to build on the satisfactory progress made so far.