- FTSE 100 up by less than a point
- AB Foods raised by Primark
- The Fed warns about risky assets
8:33 am: Supermarket sales drop and prices rise
UK grocery sales have fallen over the past twelve weeks as shoppers see prices continue to rise.
Sales fell 1.9% year on year in the 12 weeks through October 31, 2021, according to the latest figures from Kantar, but are still higher than before the pandemic, up 7.3% from compared to 2019.
Like-for-like grocery price inflation stood at 2.1% over the past four weeks, its highest level since August 2020. Over the past 12 weeks, inflation has stood at 1.00%. 5%.
Prices are rising fastest in markets such as salty snacks, canned colas, and crisps, while falling in fresh bacon, vegetables, and cat and dog treats.
Kantar said some habits of the pandemic remain, with more but less trips to the supermarket.
Shoppers made 40 million fewer trips to supermarkets per month than in 2019, while a fifth of households order their groceries online each month.
Halloween gave sales a boost, with seasonal sweets up 27%.
And people are getting ready for Christmas early this year: 4.7 million households bought tarts in October and 1.6 million bought Christmas puddings.
Tesco PLC (LSE: TSCO), up 0.27% to 275.58p, was the only retailer to post year-over-year growth with sales up 0.3% over the years. 12 weeks preceding October 31.
J Sainsbury PLC saw its sales fall by 2.8%, Morrisons recently acquired by 4.3% and Ocado Group PLC (LSE: OCDO) by 2.1%.
8:18 am: Cautious start for the UK market
Leading stocks have indeed got off to a disappointing start as the gloomy mood of the week continues.
The FTSE 100 is barely changed, up just 0.57 points to 7,300.97 despite new records set again on Wall Street.
Indeed, current high asset valuations are starting to cause concern, not just Morgan Stanley (NYSE: MS) (below).
The US Federal Reserve also warned on Monday that a rise in the prices of risky assets this year could see them fall sharply if the economic recovery turns sour.
He said: “The prices of risky assets have generally increased since the previous report and in some markets the prices are high relative to expected cash flows. “
He also fears that problems in China’s real estate sector – including struggling Evergrande – could hurt its financial system and spread elsewhere.
To date, Associated British Foods PLC (LSE: ABF), up 5.38%, is the largest increase in the leading index.
The company said it expects “significant progress” in earnings over the next few months, as its Primark retail business rebounds strongly.
It is estimated that the fast fashion business will recoup at least the £ 2 billion in lost sales due to store closures last year, unless COVID-19 restrictions are re-imposed.
Richard Hunter, Head of Markets at Interactive Investor, said: “The advantages of the group’s diversity of activities and geographic scope have enabled AB Foods to grow, despite further major disruptions that have limited Primark’s contribution.
“The divisions that did the heavy lifting during the pandemic, when the Primark stores were closed, continue to make a vital contribution, with the major grocery and sugar businesses still growing…
“The real driver of the business, however, is Primark, which is helping to keep it running clean. During this reference period, a third of the available trading days were lost due to various foreclosure restrictions resulting in an estimated loss of sales.However, when the stores opened, the situation was dramatically different.
“Not surprisingly, like-for-like sales remain 12% below pre-pandemic levels, but the operating margin of 10.6% in the second half is a good reminder of Primark’s capabilities. Adjusted operating profit, which grew a remarkable 15% during the period, also reflects the number of customers returning to its stores when possible, releasing pent-up demand and with oversized baskets further enhancing return. . “
6:50 a.m .: Markets should start slowly
The FTSE 100 is heading for a drop on Tuesday morning, extending its disappointing start to the week.
Spread betters on the IG platform predict that the London blue chip index will drop 20 points at the opening, after losing nearly 4 points yesterday to close at just over 7,300.
This is despite Footsie’s three Wall Street cousins setting more records overnight, although apart from the Dow Jones rising 0.3%, the S&P 500 and Nasdaq each rose only 0.1%.
A warning also came from the head of wealth management at Morgan Stanley (NYSE: MS) that the “risks of a market bubble are increasing”, with valuations “strained” and investors “showcasing the patience of the market. Fed facing interest rate hikes ”.
Specifically for this week, the lack of macro data on the calendar, according to market analyst Jeffrey Halley in Oanda, leaves the markets “to their own devices so far, adrift on the tides of sentiment swings and to rent a comment from central bank officials ”.
“With nothing major to sink their teeth into, the street has continued to return to its happy place, interest rates are falling for longer, buying up everything but the US dollar,” he added.
“Wall Street’s FOMO gnomes managed to push stocks slightly higher to a new record close; bond yields drifted a little higher after falling on Friday. Yet this was probably most clearly seen in the forex markets, where the US dollar fell overnight. Even gold recovered overnight again, after holding its rise to $ 1,800.00 on Friday. “
For today in London there is some data, although limited to the retail sector, with the British Retail Consortium seeing a 0.2% drop in like-for-like sales in October, improving by compared to 0.6% the previous month.
Later there will also be data on Kantar’s supermarket industry, as well as results from Primark owner, Associated British Foods PLC (LSE: ABF) and Watches of Switzerland.
Outside of retail, there are updates from home builder Persimmon, real estate developer Land Securities, and insurer Direct Line.
6h50 : Early Markets – Asie / Australie
Shares in the Asia-Pacific region were mixed on Tuesday, with shares of Japanese conglomerate SoftBank Group jumping about 10% after announcing a buyback plan to trillion yen ($ 8.83 billion ) of its own actions.
China’s Shanghai Composite Index gained 0.16%, Hong Kong Hang Seng Index rose 0.20%
In Japan, the Nikkei 225 slipped 0.75% while South Korea’s Kospi was up 0.04%.
The Australian S & P / ASX200 fell 0.24% to close at 7,434.2 points as gains in the materials sector were offset by financials and consumer stocks.
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