FTSE 100 closes ahead as traders switch to buy; supermarket sector gains

  • FTSE 100 closes up but lower on week
  • M&S upgrades profit guidance
  • US stocks ahead

5pm: FTSE closes 29 points up

FTSE 100 closed ahead on Friday, while Wall Street also rose, as investors decided to end the recent share selling bout.

Having closed on Thursday 110 points lower, Britain’s index of leading shares closed the last day of the trading week up 29 points, or 0.41%, at 7,087.

Over the week as a whole, the index, however, lost about 1.8%.

FTSE 250 also rose on the day, adding 144 points, or 0.61%, at 23,750.

Across the pond, the Dow Jones Industrial Average added over 200 points at 35,095. The S&P 500 added around 24 points at 4,429 and the Nasdaq gained 98 points at 14,640.

“2021 continues to be the year of small dips, in stark contrast to 2020. After just a three day drop from the record high for the S&P 500 the buyers have decided that enough is enough, and have stepped in to keep the bounce from yesterday’s lows going,” noted Chris Beauchamp, chief market analyst at IG, the online trading firm.

“Traders hoping that Jackson Hole and the end of the summer lull will combine to kick off some heavy volatility could well be disappointed. Today’s price action shows that the urge to buy weakness remains, a strong force that has so far prevented any major selloff this year,” he added.

On FTSE, supermarkets gained ground amid news of the takeover deal for Morrisons. Shares in the Bradford-headquartered grocer added Sainsbury’s added 1.8% at 294.40p.

“It is unlikely that the rest of the sector will become bid targets, but the vote of confidence in Morrisons and the fact that more than one firm sought to buy the group sounds a note of confidence in the sector’s prospects,” suggested Beauchamp.

4pm: Footsie gaining strength

After a big wobble yesterday and a soft start this morning, the FTSE 100 is heading into the weekend with a bit more confidence.

The blue chip index is up 30 points at 7090, but is still set to post its first weekly loss in over a month.

While European markets have recovered somewhat, “we can’t ignore the fact that this week has seen a bit of a shift in sentiment when it comes to optimism about the overall recovery story,” says Michael Hewson at CMC Markets.

“Some sectors have taken a bit more punishment than most this week, notably luxury stocks, as well as basic resources over concerns that the combined headwinds of rising delta infections, supply chain constraints and a self-induced slowdown in China means that we’ve probably seen the peak of the recovery, just over a week since we were posting record highs.”

14.50: Tesla Bot gives a lift to US markets

London stocks have been given a lift as Wall Street made a healthy start with gains for Nasdaq, the S&P500 and the Dow Jones.

Tesla – one of the most popular stocks among UK investors – helped Nasdaq on news of its human-robot prototype overnight, though some were sceptical about it ever being completed.

Elon Musk said the new bot would handle dangerous and mundane tasks, such as picking groceries, and take the drudgery out of everyday life.

“Our cars are basically semi-sentient robots on wheels,” Tesla’s CEO added.

Shares in Tesla opened 2.1% higher at US$688 though not all were impressed by the company’s AI day.

“Unfortunately, as we have seen with robotaxis and other future sci-fi projects for Musk we view this Tesla Bot as an absolute head-scratcher that will further agitate investors at a time the Street is showing growing concern around rising EV competition and safety issues for Tesla,” said Wedbush analyst Daniel Ives.

Chinese electric vehicle makers Nio Inc and XPeng Inc are also higher despite regulators in China giving notice of tighter regulation on the usage and collection of data by car companies.

Nasdaq climbed 0.7% to 14,639 while the Dow Jones and S&P 500 added 0.3% and 0.4% respectively.

FTSE 100 meanwhile also perked up adding 12 to 7,070.

1.16pm: Bitcoin rally continues

The FTSE 100 almost clawed back its losses around lunchtime but its grip slipped and it remains underwater for now, down eight points at 7,050.

JD Sports Fashion, the UK and US sportswear retailer, is top of the London leaderboard as investors read across from US sector peer Foot Locker’s strong quarterly update.

Elsewhere Sainsbury’s is on the up, helped by the Morrisons bid news, while British Airways owner IAG and Guinness and Smirnoff maker Diageo are the biggest fallers.

Elsewhere, crypto markets are more bullish, with Bitcoin up 6% against the greenback at $47,019.28.

ADA, the token of the Cardano ‘green’ blockchain platform, also traded at new all-time highs as anticipation among crypto traders grows over a key technology update for the platform.

The ADA coin was up 20% to US$2.55 in the early hours this morning, taking its market cap to over US$80bn to strengthen the position it reached earlier this week as the third-largest crypto by value (read more).

In other news, Coinbase Global Inc (NASDAQ:COIN) said it is planning to add US$500mln in cryptocurrency to its holdings, according to a tweet from co-founder and chief executive Brian Armstrong..

12.15pm: Footsie struggling

Footsie was struggling for direction at lunchtime with the performance of AstraZeneca PLC (LSE:AZN) typical of the mood.

There was good news from the pharma giant about the efficacy of a new antibody treatment for Covid-19 in a phase III trial.

The drug, AZD7442, reduced the risk of developing symptomatic COVID-19 by 77% compared to placebo, the drug company said in a statement.

That, though, was overshadowed by newly and expensively acquired subsidiary Alexion ending clinical trials of Ultomiris as a treatment for motor neurone disease.

AstraZeneca fell 0.6% to 8,680p, which might not seem much but it is Footsie’s largest company at a market cap of GBP135bn and its dip contributed to the index’s 17 points drop to 7,041.

The blue-chip list is heading for its worst week since January unless the US open sparks a major rally, but current indications are for the main US indices to open lower.

The Dow and S&P are tipped to drop 0.5% and Nasdaq by 0.3%.

11.11am: M&S resurgent

The Footsie is little changed from earlier, still down 19 points, but the irrepressible FTSE 250 is back in positive territory.

Led by resurgent Marks & Sparks, the mid-cap index is up 16 points at 23,623, having started positively but then swung lower in synch with its larger sibling.

Retailers are leading the way there too, with M&S joined by Morrisons, Watches Of Switzerland and Grafton Group (ISE:GFTU), as well as shopping centre owner Hammerson (LSE:HMSO).

Commenting on the earlier retail stats from the ONS, Julie Palmer at Begbies Traynor (AIM:BEG), said: “With ‘death of the high street’ being a common phrase in the past two years, a resurrection of footfall is probably the best news that this business bloodbath has seen for a long time.”

She noted that research by her company had recorded the biggest quarterly fall in numbers of distressed retailers since 2015 and the first since 2019.

“But this positive news could turn out to be more of a zombie apocalypse than a Lazarus effect. While the last quarter showed good recovery, the number of significantly distressed retailers in the last year still increased by 21% – and even online retailers saw a 26% increase in the last 12 months.

“There are still far too many of these businesses surviving off borrowed money and court reprieves, so when the creditors – especially landlords – come calling, they may be in well over their heads. Bricks and mortar businesses, with landlords that could have been waiting for rent for more than a year, will be especially at risk and trying to push people through the doors to drum up funds, but they should also be using this time to renegotiate terms rather than panic.

“Amidst increasing pressure on performance, shifting consumer behaviours, and the increasing demand for things to be streamlined digitally, there is now an added necessity for businesses to act decisively. For many, there will be an opportunity on the high street – as Primark and Next have demonstrated – but it will take innovation and partnership to create a new high street that brings a high level of footfall that isn’t just down to pent up demand.”

9.50am: Modest drop

London’s blue-chip stocks are continuing to mooch around in negative territory as various concerns offset the benefits of a softer pound.

The FTSE 100 has given up almost 19 points, a 0.26% fall to 7040.

As well as miners, other leading fallers include Diageo PLC (LSE:DGE), Hargreaves Lansdown PLC (LSE:HL.), Scottish Mortgage Investment Trust PLC (LSE:SMT) and Melrose Industries PLC (LSE:MRO).

After the heavy losses yesterday, investors will be relieved to see only a modest drop in the Footsie this morning, reckons AJ Bell financial analyst Danni Hewson.

“UK stocks held the line despite further weakness in Asia overnight, with retailers enjoying some strength despite signs that some of the pent up consumer spending had leaked from the high street to hospitality in July as restaurants and leisure facilities reopened,” she said.

“Public borrowing was revealed to be lower as the Government’s life support measures for the economy are gradually dialled back.

“Markets may struggle for direction until the latter part of next week given a dearth of corporate and economic updates with the Jackson Hole summit kicking off next Thursday and giving central bankers and other economic decision makers a chance to outline their plans for the next phase of the pandemic recovery.”

8.39am: Forth and back for FTSE

The FTSE 100 opened higher but quickly lost confidence and ducked back into the red after disappointing UK retail sales and consumer confidence data.

The index was down nine points at just under 7050 after half an hour’s trading, with copper miner Antofagasta PLC (LSE:ANTO) and precious metals specialist Fresnillo PLC (LSE:FRES) leading the fallers.

With new retail sales data and after Morrisons upgraded offer (read more on the increased bid here), the blue-chip leaders are all retailers, led by J Sainsbury PLC (LSE:SBRY), Next PLC (LSE:NXT), JD Sports Fashion PLC (LSE:JD.), Ocado Group PLC (LSE:OCDO), Kingfisher PLC (LSE:KGF) and Tesco PLC (LSE:TSCO).

Giving a further boost are results from Marks and Spencer Group PLC (LSE:MKS), which issued its first unscheduled upgrade to earnings in years, as its food business performed robustly and the online joint venture with Ocado goes well.

Some of the hangover from weakness in commodities and oil prices has lingered on, says market analyst Richard Hunter at Interactive Investor, with the crackdowns in China adding to the mix.

“In particular, perceived weakening economic growth is being exacerbated by the tightening of restrictions for both the technology and the luxury goods sectors, while the presence of the Delta variant is also contributing to the general market woes in the region’s markets.”

Looking at the retail figures from the Office for National Statistics, July’s unexpectedly sharp 2.5% month-on-month fall in sales affirms the view that the April sugar rush of pent up demand has faded quickly, said Marc Ostwald at ADM Investor Services.

“However other factors were also in play, including the re-opening switch to services from goods spending, a reactive correction to the June boost from Euro 2020 and indeed the very poor weather during July,” Ostwald added.

“Be that as it may, estimates for private consumption for H2 will probably need to be dialled back, especially as the sharper than expected drop in July CPI would have boosted volumes estimates, though again it has to be emphasized that seasonal adjustments have been left in tatters by pandemic effects.”

There is also consumer confidence data for last month from GfK, showing a slip from the pandemic high of -7 to -8, primarily driven a drop back in the large purchases sub-index the month before, while outlooks for personal finances and the economic situation were unchanged or slightly better.

Public debt numbers have also been posted, with a better than expected outturn for public sector net borrowing (PSNB) running at some GBP26bn below the Office for Budget Responsibility’s estimate for the current financial year.

In normal times this would be very significant, said Ostwald, “but far less in these heavy pandemic related govt spending days”.

6.35am: Jittery start predicted

FTSE 100 was tipped for another jittery start on Friday after a 110-point slump the previous day on worries over the US Federal Reserve tightening, China’s economy and the spread of the Delta variant of Covid.

Those themes will overshadow the start of trading today according to financial spreadbetters with indicators an hour before the market opens pointing to around a 10 point rebound from Thursday’s close of 7,058.

Some respite might come from the higher bid for grocery chain Morrisons by former Tesco boss Sir Terry Leahy and private equity firm Clayton, Dubilier & Rice.

Wm Morrison Supermarkets PLC (LSE:MRW) has recommended the new 285p offer, which values the firm at around GBP7bn and trumps a previously agreed bid from Fortress, another private equity firm

Leahy said: “CD&R values Morrisons’ distinctive business model and is committed to supporting it, including the successful ESG and broader stakeholder engagement strategies of the company that are essential to its continued success.”

CDR’s new offer is worth 24% more than its original June offer of 230p that kickstarted the whole bidding process.

US markets closed broadly flat overnight even though new data suggests the economy there is growing faster than first thought.

The Commerce Department’s latest quarterly services survey points to GDP running well above the 6.5% reported by the US government last month said economists, which might add to worries over the Fed raising interest rates earlier than expected.

Dow Jones rose slightly while the S& P was flat.

Asian markets meanwhile headed for their lowest close collectively since November following their worst week since February as China struggled.


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