Morrisons Shares Leap on Partnership with Amazon

We begin in Asia this morning where Japanese factory output rose at its fastest pace in a year during January, with a 3.7% month on month rise. The reading beat estimates of +3.3% following December’s decline of 1.7%. Manufacturers expect output to fall by 5.2% during February only for March to grow by 3.1%, a cumulative fall of 0.3% from the prior quarter. The Nikkei 225 finished 0.63% higher on Monday and the yen strengthened against most currencies, up almost 1% against the dollar and c. 0.5% against the pound.

Although widely expected, the G20 summit from Shanghai that came to an end over the weekend seemingly failed in terms of replenishing hope for global growth. The worry is that central banker’s ammo is now running low and seemingly fiscal policy will be the way forward for 2016. The UK Chancellor George Osborne is already warning of imminent spending cuts in his budget due for release in around 2 weeks time. Those present at the summit did not overlook the ‘Brexit’ situation, finance ministers warning that if the UK leaves the EU it could cause a global economic shock.

US consumer spending increased 0.5% during January alongside underlying inflation rising at its fastest pace in four years. This keeps a Fed rate hike on the ‘edge of the table’. At the American open on Monday markets have opened with very small gains, contrary to the European and Asian sessions preceding it.

Looking at the markets today, shares in Morrisons climbed after the supermarket announced they will supply groceries to UK Amazon customers. This will be Amazon’s latest attempt to disrupt a particular area of the market and it may pose a significant threat to the likes of Tesco’s and other similar online supermarket operations. The Amazon Pantry service that was launched last year, until now, had not stocked fresh food. The new agreed partnership although will introduce the supply of fresh food, frozen food and non-perishable goods, the service becoming available later on in the year. Morrisons shares finished the day up 5.91%. The FTSE 100 rarely sat still on Monday erasing early losses in the afternoon to then see these slowly slide away to the close, where the index finished almost neutral at +0.02%.

Raspberry Pi, owned by Premier Farnell, has become the best selling British computer ever. The Raspberry Pi project founder Eben Upton believes it will surpass Amstrad following the release of the Raspberry Pi 3 today.

Starbuck’s have announced they will open their first store in Italy. Plans are to open the store in Milan next year in partnership with Percassi. Howard Schultz, chairman and CEO of Starbucks, reportedly got the inspiration to found Starbucks following a trip to Milan in the 80’s.

A British Retail Consortium report has predicted that the British retail sector may lose close to 1 million jobs over the next decade from chief causes like the National Living Wage, the new apprentice levy and the continued growth in online shopping. It also claims that nearly a third of shops in the UK could close as a result of impending changes to impact the sector take hold, most notably expecting store closures in Wales and the North.

Further data released today also showed that the Eurozone slipped back into deflation, due to a combination of weak energy prices and low growth. Prices fell 0.2% during February following January’s 0.3% increase. This is the first fall in inflation for the Eurozone since September and adds pressure to the ECB before they meet next week looking at tackling the low inflation environment.

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