Two years into the credit crunch, hopes are rising that an end to hard times could be on the horizon.

Bankers – some anyway – are again revelling in bonuses and Monday’s updates from Barclays and HSBC sent the market powering ahead. That day, the FTSE 100 closed at its highest since October.

So how do retailers stand? On Monday stores were down. But over the year general retailers in particular have had a good run versus the All-Share index.

Many retailers have met analysts’ admittedly bearish expectations and the sense that the sector had been oversold has helped it rise since Christmas.

City attention was focused as much on the robustness of retailers’ financial structures as it was on trading and there were fears that some would be dragged down by the weight of debt or failure to renegotiate banking facilities.

In the event, such fears often proved unfounded. In the past fortnight alone, Findel unveiled an £81m capital raising and Game successfully refinanced borrowings.

Now that immediate financial challenges are in many cases out of the way, attention must once again turn to trading – the ultimate guarantor of any retailer’s success.

And trading depends on how consumers feel. The latest GfK NOP Consumer Confidence Index for July remained in negative territory. However, sentiment was flat month on month and is up 14 points year on year – one more sign that while there’s plenty of room for improvement, things are not getting worse.

Wickes owner Travis Perkins described things perfectly at last week’s interims: “We don’t see green shoots, but at least less toxic waste is being spilt on the soil.”

There could be a pause in rising retail valuations as investors take stock of the trading outlook as the golden quarter nears. After the year’s uptick so far there may be more upgrades but some retailers are trading on unjustified earnings multiples compared with their peers.

And until uncertainties such as Christmas and the impact of a higher VAT rate are out of the way, the City may decide the sector overall is fairly valued at present.

Follow George on Twitter at twitter.com/GeorgeMacD

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