MARKET REPORT: Footsie has its best week in four months

The FTSE 100 had its best week in four months as luxury goods and alcohol stocks soared amid signs that consumers are still spending their money on luxury goods.

On an optimistic day for investors, the blue chip index rose 1.4 percent, or 105.36 points, to 7,635.09.

The FTSE 250 meanwhile gained 0.6 percent, or 114.92 points, to 19338.02.

That took the FTSE 100’s gain this week to more than 2.3 percent – its best performance since mid-September.

Yesterday’s rally was driven by luxury and alcohol stocks, after a handful of reassuring updates provided much-needed breathing space for two sectors that have come under pressure as consumers cut back on expensive purchases.

Barclays has upgraded Europe’s luxury sector after LVMH reported record sales and profits on Thursday last year following a strong final quarter.

The feel-good factor surrounding the French giant washed over London-listed companies, with Burberry rising 4.9 percent (or 63p) to 1,341.5p. And drinks giant Diageo gained 5.1 percent, or 139 cents, to 2,849 cents, after cognac maker Remy posted positive results.

Russ Mould, investment director at AJ Bell, said: ‘It appears the sector may be going through a phase where investors reward companies that say things are not as bad as feared, rather than saying all is well.’

But not everyone was so optimistic. Analysts at JP Morgan say positive sentiment around UK retailers is likely to change over the next two to three months.

The bank cut its ratings on Tesco and Sainsbury’s, Britain’s two biggest supermarkets, as it expects they and others will see a slowdown similar to fellow grocers in the US and Europe. Tesco shares fell 1.8 per cent, or 5.3p, to 293.5p, and Sainsbury’s lost 1.9 per cent, or 5.4p, to 276p.

There was also talk of a rating downgrade for Tullow Oil, as Stifel analysts warned that the West African energy company’s debt will impact production. Shares fell 6 percent, or 2.08p, to 32.42p.

First Group, the transport group behind Avanti West Coast and Great Western Railways (GWR), has moved to expand its footprint in North Yorkshire with the purchase of coach and bus operator York Pullman. But shares fell 0.1 percent, or 0.2p, to 169p.

Another company to post a profit was home improvement company Wickes, after it said it expects 2023 profits to be at the higher end of forecasts. Shares rose 8.4 percent, or 12.1p, to 157p.

After the best summer ever, On the Beach is still doing well. The value of holidays booked in the peak period up to and including January 24 was 27 percent higher than a year earlier. But shares fell 2.2 per cent, or 3.6p, to 160.4p. Premier Inn owner Whitbread traded higher after extending its £300 million share buyback program by three months. The stock rose 1.3 percent, or 45p, to 3646p.

There was also good news for investors in digital advertising agency S4 Capital after it outlined plans for a £2.7m share buyback just days after reporting a 4 per cent drop in revenue for 2023. Shares rose 6.1 percent, or 2.48p, to 42.94p.

Even a profit warning didn’t stop car dealer Motorpoint from announcing plans to buy back £5 million worth of shares from investors.

The company expects profits for the year to March 31 to be up to £6 million below expectations after a difficult third quarter. In addition to its share buyback plans, Motorpoint remained optimistic about its plans to reduce costs and expectations that the used car market will recover. The shares added 0.7 percent, or 0.7p, to 98.7p.

Lender Paragon Bank has started the financial year on a positive note and has reiterated its annual forecasts. But shares fell 1.5 percent, or 11p, to 712p.