Market Report: Global stocks suffer worst January in 7 years despite late rally

Japan stocks

Bank of Japan surprised markets by announcing negative interest rates.

Market Report: Global stocks suffer worst January in 7 years despite late rally

Global stocks markets suffered their worst January since 2009 after a vicious sell-off wiped $7 trillion off their value in what has been a roller coaster month for equities.

However, a late rally took the sting out of the tumultuous month after the Bank of Japan stunned markets by adopting negative interest rates.

The FTSE 100 jumped 127.72 points, or 2.15pc, to close at 6,059.50 yesterday, while the German DAX and the CAC in Paris advanced 1.2pc and 1.7pc respectively.

Mike van Dulken, of Accendo Markets, said: “Equity markets are risk-on again, happy to see another major central bank join the negative interest rate party, helping offset what looks to have been a premature Fed hike last month and maintaining faith in policy staying lower and looser for longer”.

Jittery January: FTSE 100 falls 2.54pc

Imperial Tobacco was among the top risers on the FTSE yesterday after Citigroup declared it a “top pick” in the European consumer staples sector. The shares leapt 132p, or 3.6pc, to £37.86 after the investment bank reiterated its “buy” rating, highlighting the company’s low emerging markets exposure and the likelihood of a takeover bid.

The bank believes the recent swings in foreign exchange rates have been kinder to Imperial Tobacco than its peers because only 7pc of its profits come from emerging markets in which currencies float freely.

Separately, there was also some vague speculation in the City that China Tobacco may be interested in making a bid for the FTSE 100 company – a theme Citigroup also addressed.

Adam Spielman, of Citigroup, said: “We think there is a material, but less than 50pc, chance of a bid in the next 12 months.” An acquisition price in the range of £49 to £55 per share “could be justified”, he added.

However, the bank believes a takeover bid will depend on whether potential suitors, including British American Tobacco, want greater exposure to Europe and developed markets.

Elsewhere, UK home shopping group Findelslumped by more than 11pc in intraday trade to a four-month low after it warned on profits, before recovering to close in positive territory – up 1.6pc at 195p.

The group, in which Sports Direct founder Mike Ashley holds a 17.22pc stake, said profit for the year would be between £2m and £3m lower than previously forecast due to foreign currency headwinds and a disappointing third-quarter performance.

It also admitted its Express Gifts business didn’t have enough stock to meet demand in the last quarter after it adopted “a cautious approach to stock management”.

Home Retail Group slumped 4.1pc to 136.7p – following a Financial Times report which purported takeover talks with Sainsbury’s had stalled.

Finally, mining stocks sank to the bottom of the blue-chip index after Credit Suisse warned the credit market continues to signal “severe stress” in the resources sector. Glencore, Antofagasta and BHP Billiton all lost between 0.5pc and 1.1pc – as they became the only three fallers on the FTSE 100.

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