Market Report: Entire European retail sector hit with downgrade to 'negative outlook'

Barclays is checking out of shops, forecasting storm clouds on the horizon for retailers. Christodoulos Chaviaras, an analyst at the bank, hit the entire European retail sector with a downgrade to “negative outlook”, arguing a looming rise in rates and tightening of monetary policy is likely to put the squeeze on household spending.

In preparation for the crunch, the analyst downgraded Halfords, off 7.2p at 488.5p, and Dunelm, 10p lower at 893p. Target prices for Kingfisher, down 2.2p at 304.6p, and Asos, off 46p at 2,182p, were also cut, while Marks & Spencer, 0.9p lighter at 436.4p, had its “underweight” rating reaffirmed.

One of the few retailers to escape the red pen was Dixons Carphone, up 0.2p at 341.5p, with the analyst saying the recently merged company will benefit from cost savings unlocked by the deal and also score a boost from the growth of 4G and “smart” products like health-monitoring wristbands.

The FTSE 100 ended the week flat, down 2.41 points at 6,775.25. Traders were happy to sit on their hands as the influential central bankers’ conference continues in the US. Rumours that Vodafone could be a takeover target helped the telecoms major climb 3.25p to 205.85p.

A very real bid target, Hyder Consulting, also performed well. Dutch suitor Arcadis returned with a fresh bid of 730p a share in an effort to fend off Japanese interloper Nippon Koei. Arcadis’s offer, its second, has the support of Hyder’s board but punters are betting we haven’t seen the last of Nippon. Hyder closed 32p higher at 739p.

Henry Boot and Skyepharma shot the lights out with half-year figures, climbing to the top of the small-cap index. The construction specialist Boot, up 14.5p at 202p, said activity in the commercial sector is now at its highest since 2007 and that it is on track to beat forecasts for the year. Skyepharma added 31p to 280.25p thanks to a 187 per cent rise in operating profit to £13.2m.

On AIM, the tidal power specialist Atlantis Resources gushed 5.5p higher to 49.5p after announcing it has secured £50m in funding for its flagship Scottish project.