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Monday 13th January ...
Monday 13th January

The UK equity market put in a fairly poor performance relative to most global equity markets last week, ending the week down 0.8%, at 4056.6.

One factor behind poor performance was investor concern about retail sector stocks following a mixed bag of company reports for the crucial pre-Christmas period. These fears were compounded by a report from the CBI which suggested spending had failed to match expectations.

Its latest Distributive Trades Survey showed retail sales volumes in December higher than at the end of 1995, but well down on predictions made a month earlier.

One company to report poor Christmas sales was the catalogue retailer, Argos. It shocked the market by announcing it would be unable to meet analysts' current expectations, due to disappointing sale volumes in December.

This news came hot on the heels of a profit warning from retail group Sears, and helped prompt a general decline in retail sector stocks. Investors will watch closly for any further anecdotal evidence of a diappsointing Christmas when Carpetright and John Menzies report this week.

Last week's poor performance also reflects heightened anxiety about a possible interest rate hike in the UK.

The Chancellor of the Exchequer and the Governor of the Bank of England meet on Wednesday for their regular monetary meeting, and the consensus remains fairly evenly split on the prospects for a 0.25% increase in rates to 6.25%.

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