Market report

Wall St hit on Fed rate call | Tesco’s Christmas cracker

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10pm: US close

Wall Street turned negative after minutes of the Federal Reserve’s open market committee meeting revealed that the central bank may need to raise interest rates sooner than expected and reduce asset holdings quickly.

The Dow Jones industrial Average dropped 1.07% whilst the S&P 500 fell 1.94% and the Nasdaq lost 3.3%.

5pm: London close

Supermarket trading figures were a key focus with Tesco emerging the Christmas winner, its shares adding 2.75p to 296.68p as it continued a surge that has seen its value rise 25.5% in the past six months.

Figures from Kantar showed groceries at Britain’s biggest chain down just 0.9% over the 12 weeks to 26 December compared with the same period in 2020 when several areas in Britain faced COVID-19 restrictions that boosted food sales. On a two-year basis, Tesco’s sales were up 10.1%. Sainsbury’s, Asda and Morrisons saw their sales fall by 4.4%, 3.9% and 6.5% respectively over the same period (more detail below).

In October, Tesco raised its full year earnings forecast. Some analysts believe it may raise its outlook again when it updates on trading on Jan. 13. Its shares have increased 24% over the last year.

Kantar said total UK grocery sales were £31.7 billion over the 12-week period, down 3% on 2020 but up 8% on 2019.

Marks and Spencer was also in the black by 4.7%, with a possible boost coming from the retail Kantar figures. Its online partner Ocado rose 3.18% after an upgrade to ‘buy’ from ‘hold’ at Berenberg.

InterContinental Hotels was 0.68% higher after an upgrade to ‘buy’ from ‘neutral’ at UBS.

London Stock Exchange was 1.7% heavier following an upgrade to ‘buy’ from ‘neutral’ at Citi.

Elsewhere, Cineworld surged 18.02%, with traders pointing to relief that no further restrictions had been announced.

Going the other way was gambling software maker Playtech, down 0.27% after it and potential bidder JKO asked the UK Takeover Panel for more time for the latter to declare its intentions on any takeover offer.

Outsourcer Capita was 1.25% lower after the Competition and Markets Authority served an initial enforcement order over the planned £62m sale of its emergency services business to NEC Software Solutions.

The Crown

Film and television support services company Facilities by ADF became the first IPO this year, issued at 50p per share and closing at 54.5p.

The Wales-based business raised £18.4 million on the Alternative Investment Market and was valued on admission at £37.8m.

The company provides production facilities to the UK film and television industry, offering trailers and trucks for costume, make-up and production to companies including Netflix, Sky and the BBC and has provided trailers from its fleet of 500 to shows such as The Crown (pictured), Gangs of London and Peaky Blinders.

It has ambitions to grow its revenue from £8m at the end of 2020 to £100m.

The FTSE 100 ended the session up 0.16% at 7,516.87, while the FTSE 250 was off 0.53% at 23,771.18.


10.15am: Sir Keir tests positive

Labour leader Sir Keir Starmer has tested positive for Covid and will miss Prime Minister’s Questions at 3pm.

Angela Rayner will deputise.

Scotland’s First Minister Nicola Sturgeon will deliver a virtual statement to MSPs at 2pm when she is expected to ease the current 10-day isolation period.


10am: Uplift for first IPO

Shares in film and television support services company Facilities by ADF rose by 12% after the firm became the first IPO this year.

The Wales-based business raised £18.4 million on the Alternative Investment Market and was valued on admission at £37.8m. Shares were priced at 50p and hit 56p before settling at around 54p.


8.30am: Tesco wins Christmas battle

Tesco

Tesco outperformed its key rivals over the Christmas period, achieving its highest grocery market share since January 2018, according to industry data.

Market researcher Kantar said Tesco’s grocery sales over the 12 weeks to 26 December fell by 0.9% compared with the same period in 2020, when several areas in Britain faced COVID-19 restrictions that boosted food sales. On a two-year basis, Tesco’s sales were up 10.1%.

Sainsbury’s, Asda and Morrisons saw their sales fall by 4.4%, 3.9% and 6.5% respectively over the 12-week period compared with 2020.


8am: London opens lower

Blue chips opened lower in London as forecast as traders monitor latest Omicron developments and await news from the Federal Reserve in Washington (see below).

The FTSE 100, which soared by 120 points yesterday, opened 15.11 points lower at 7,490.04.


7.15am: Ryanair traffic

Airline Ryanair said it carried 9.5 million passengers in December compared with 1.9m in the same month in 2020.

The latest figure represents a load factor of 81%, against 86% in November and 84% in October.


12.01am: Cost of living tops concerns

Money - own pic

Inflation and the cost of living are the biggest concerns facing over half (54%) of people in the UK at the start of 2022, with nearly a third (31%) of people feeling less confident in their financial situation as a result.

However, for most Brits confidence in their overall financial situation generally remains steady compared to six months ago, according to the latest TSB Money Confidence Barometer

The survey shows that 82% of people have already experienced an increase in their costs of living such as increased cost of groceries, day-to-day essentials and gas and electricity.

As a result, almost a quarter (23%) said they have dipped into savings, one in five (19%) said they have changed their usual habits or behaviours such as changing shopping habits and over a third (36%) have cut back on spending on non-essential purchases. 19% have increased debt either by taking out new credit, increasing existing credit or going into their overdraft. 


Global markets

Traders will look to the latest Federal Reserve minutes released later amid signs of of weakness creeping into the US economic data.

The US manufacturing purchasing managers’ index fell to 58.7 points in December from 61.1 in November. The figure was below market forecasts.

On Wall Street, the Dow Jones rose 214 points or 0.59%. The S&P 500 dipped only slightly lower whilst the Nasdaq fell 1.33%.

Stocks in the Asia-Pacific region fell on Wednesday as investors watched US Treasury yields, which rose at the fastest new year pace in two decades.

China’s Shanghai Composite fell 1.00% and Hong Kong’s Hang Seng index declined 1.30%. The Nikkei in Japan rose 0.10% while South Korea’s Kospi dipped 1.21%.

Brent oil was quoted at $80.09 a barrel from $80.27.



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