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UK stock market commentary (January 15, 2013): More retail woe as HMV hits the buffers

The woe for the high street continues as HMV becomes the latest casualty of the retail sector. Just after the digital camera specialist Jessops went under it’s now the turn of the CD, DVD and games giant to turn to the administrators. Unfortunately, HMV is a sad story that tells of a company unable to foresee the winds of change within its industry and before it reacted it was too late. The household name was once massive with almost everyone looking to buy any sort of music walking through their doors and then ending up spending far more than they’d originally planned. It was one of the ultimate browsing venues but most of those shoppers now will probably not remember the last time they went into a HMV store. Not even Christmas could save them and if the store disappears from our highs street altogether that will be a sad day.

A bright spot for retailers this morning however is the turnaround in Burberry which only a few months ago had issued a profits warning following slowing Chinese sales. The stock market adage is that profit warnings come in threes, but it would seem not for Burberry which saw its share price plunge to a low of around £10 in 2012 and is now back above £14 up almost 100p. Despite slowing sales in Europe its global footprint and presence in Asia is outweighing the recession on the continent and so the stock is making its march back towards the dizzy heights set in 2011 and 2012 of £16.

The broader FTSE 100 however is just in the red this morning as investors struggle to add to the gains seen so far this year. Another spat between President Obama and John Boehner brought back the fears of the US fiscal woes that haunted the markets ahead of the Christmas break, and investors are wary that it’s only a few weeks away from the spending cuts deadline and the imminent debt ceiling issue. On top of this last night technology giant Apple shocked the market by reporting weak iPhone sales upsetting US equities in early trade although the Dow remained resilient, advancing 20 points to 13,507. For now the uptrend looks to still be intact as investors remain overall quite optimistic about quarterly results.

So the FTSE 100 is hovering around 6100 and we’ve now seen the index trade within a 40/50 point range for almost a week. Today sees lots of inflation data due for release on both sides of the Atlantic whilst there’re also retail sales figures from the US at lunchtime today.

Euro area politicians across the board have come out one by one reiterating their optimism that the worst part of the crisis is ‘probably behind us’. The display implied coordination and a show of unity which seems to be what investors wanted to hear. As a result the demand for the euro was boosted sending its price against the US dollar to 1.3383. However, potential questions on the short term could be a bailout for Cyprus and elections in Italy next month.

Gold closed slightly up at $1667.6 yesterday as the President of the Chicago Federal Reserve said that the world's largest economy will continue with monetary easing measures in the future. This made investors happy as demand for gold as a hedge against inflation usually increases during times of loose monetary policy. The precious metal has fallen by around 0.2 percent this month after rising by around 7 percent in 2012, the smallest advance in four years.

Ongoing signs of recovery in the US economy kept the oil prices well supported lately with the WTI climbing 46 cents yesterday to $94.18 a barrel. Cold weather especially on the US East Coast and expectations of good figures for retails sales due later today were also seen as having a positive influence.