Supermarket Sweep

Monday, April 30: All the talk this morning was centred around the confirmation that Sainsbury’s and Asda plan to merge. Two of the biggest supermarkets in the UK, subject to approval, will form an industry giant. Asda is currently owned by US Walmart, and this deal is exclusive to the British arm of the business. Shares in Sainsbury’s jumped 15% on the FTSE this morning, which probably just helped the FTSE close the day 0.13% higher. Of course, we’re in the very early stages of the deal and proposals about the outcome are yet to be confirmed but at this stage it isn’t believed to involve store closures and it is expected that prices will fall at both business. Back in 2016 Argos was bought by Sainsbury’s in a deal spun out of Home Group. The relationship these two businesses have will be copied at Asda, with concessions opening within Asda stores.  The deal is subject to an inevitable inquest by the CMA, but analysts believe at this stage it should go through. Overall it is a strategic move to try and retaliate against the budget supermarket brands like Aldi and Lidl that have slowing been chewing away at market share for years now.

Flooring company Carpetright has announced it expects to make an annual loss of between £7m and £9m for this year. We’re all aware it is make or break at the moment as the firm looks to shareholders to back the rescue plan. The drastic change will have to see store closures, job losses and a rights issue. Shares today drifted 0.35%, down to the fact they don’t have much further to go.

As we write Wall Street has begun subdued, with the Dow flat as the S&P and NASDAQ both fall lower by c.0.3%. Oil has had a turbulent session, initially being over 2% off but it has now regained ground and sits close to $74.5 p/bbl. Earlier it was at the $73 p/bbl support line.

WPP shares were among some of the other top performers today after they released their Q1 results. Revenue decreased marginally as currency headwinds hampered performance, but the results were in line with expectations and they closed the day 8.6% higher.

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