London pre-open: FTSE to nudge higher

10th Jan 2013 07:35

City sources predict the FTSE 100 will open up two points from yesterday's close of 6,099, taking its lead from Asia where gains were seen after notably stronger-than-expected data emerged from China. UK markets closed significantly higher on Wednesday, up 45 points (equal to £11.41bn), with the index closing at its highest level since May 22nd 2008. High Street giant Marks & Spencer has reported worse-than-expected sales figures for the key Christmas period in a trading update that was partially leaked the night before. After like-for-like (LFL) sales data was leaked to Sky News wrongfully at around 20:00 on Wednesday evening - the update was scheduled for release on Thursday morning - the retailer was forced to rush out its figures and convene a management conference call, according to media reports.In other company news, recruitment firm Hays reported three per cent decline in quarterly net fee income and expects conditions to remain fragile. UK and Ireland net fees in the quarter ended December 31st fell 3%, while in Asia Pacific it was down 14%.Building materials distributor SIG said this morning that in the absence of any clear signs of macroeconomic improvement in its main countries of operation, construction markets in 2013 are expected to "remain challenging and likely to decline at a rate similar to 2012". Revenues in 2012 totalled around £2,635m, flat on a constant currency basis, though down by 4.0% in sterling due to exchange rate movements. Underlying profit is expected to be no less than £82m. Sainsbury's update yesterday revealed that Christmas same-store sales rose at the lowest rate seen in eight years. However, Questor thinks there was a lot to be optimistic about in the announcement. The company's like-for-like sales met expectations and its higher-margin (but cheaper) own-label goods are seeing sales growth of 5%, but it is the convenience store format and online that are showing good growth. As well, and when looking out to the long-term, if the UK population continues to rise at the current rate, and there is no reason to expect that it will not, the number of people should hit 70m in the next 15 years, up from about 62.6m today. With more than 7m extra mouths to feed, demand for food and other consumer goods is certain to rise. For all of the above reasons Questor keeps a hold rating on the shares.Today's UK economic announcements include the MPC policy decision, while abroad the agenda include Spanish and Italian debt auctions, the ECB interest rate, US wholesale inventories and US weekly initial unemployment claims.