Next and Primark give hopes to the West

Thursday, 17 March 2011
FashionUnited Top 100 Index plummeted Wednesday towards the 1,130.06 after losing 25.95 points. Retail stocks fell for the third straight day, dented by worries about the nuclear radiation situation in Japan and disappointing home-construction data in the U.S However, the International Fashion benchmark index was not the only plunging as the S&P Retail fell 0.6% to 497.89 also amid tensions in the Mideast and North Africa. Also dampening market sentiment, new construction of U.S. housing units plunged in February to approach an all-time-low annualized rate.

Therefore, European and U.S. shares slid for a third day on Wednesday, while Treasury debt prices jumped as the nuclear crisis in Japan raised concerns about slower worldwide growth. Investors also kept an eye on tensions in Bahrain as well as on euro-zone borrowing costs, especially in Portugal. Moody’s Investors Service cut Portugal’s rating by two notches to A3, and markets in Europe reacted, with bank stocks limiting a rise caused by bargain-hunting buyers and in the end weighing heavily on the finish.

On Wall Street, the major U.S. stock indexes fell 1 percent after comments from the European Union's energy chief about the potential risk of another catastrophe at Japan's nuclear site. By midday, though, the indexes had slightly trimmed those losses.

Guess Inc announced its quarterly results on Wednesday, becoming the corporate news of the session together with French Connection, which also presented quarterly report back to Great Britain. The company reported $1.11 earnings per share for the quarter, beating the Thomson Reuters consensus estimate of $1.06 by $0.05. During the same quarter in 2010, the company posted $0.93 earnings per share. The company’s quarterly revenue was up 17.9% on a year-over-year basis.

Reuters reported that the FTSE regained some of its own losses thanks to investors taking a breather from the panic selling on Tuesday, spurred by nuclear meltdown fears, that chopped almost 21 billion pounds ($33.86 billion) from the market. Banks, however, limited the upside of that recovery, with the news of Portugal’s lower status serving as a grim reminder of problems closer to home. Nevertheless and in a positive twist after a coursed week, Japanese shares rebounded to lead most Asian markets higher Wednesday as cheap stock valuations attracted buyers after a hefty recent selloff despite fears about high radiation levels at an earthquake-damaged nuclear complex.

Following the positive buffer, Next´s shares outstanding shone, rising 37p or 2 per cent to 1905p after High Street guru Tony Shiret, analyst at Credit Suisse, had positive things to say ahead of annual results on March 24. As Daily Mail reported, shareholders will be delighted to hear that he has retained his target price of £30. Next also took heart from the ease in cotton price, adding a further 26p to yesterday's strong gains at 1,931p. Still in the UK, an upgrade to outperform from neutral at Credit Suisse sent Primark owner Associated British Foods up the leaderboard, the group also benefiting from falling cotton prices. AB Foods shares jumped 18.5p at 958.5p.Fellow luxury brand Burberry rallied 19p at 1,129p as investors considered recent falls overdone. The quintessentially British house has big exposure in Japan, what sent it down to the floor on Tuesday´s trading.

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