Morrisons Delivers

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Tuesday, 21st August: Copper continued its rebound after the Turkey panic last week, moving on from a third consecutive week of declines as the US/China relationship looked to be less volatile. Dominating the top of the London index though were food retailers following the latest Kantar data Morrisons (+1.61%) and Ocado (+1.94%) benefitted following latest Kantar data. Morrisons held its 10.4% market share in the UK grocery market and with growth of 2.7% in the 12 weeks to 12 August, it regains its position as the fastest-growing of the UK “Big Four”. German discounters Aldi and Lidl added to their market share, now standing at 7.6% and 5.5% respectively. Kantar’s data also revealed a growth in branded products vs supermarket branded goods for the first time since May 2015. B&Q’s parent owner Kingfisher took poll position (+2.48%) despite a broker downgrade following recent lower margin guidance.

The dollar continues to trade weaker against the euro and pound as President Trump added his pennies worth on the Fed’s rate rise path. Trump’s chosen Fed Chair Jeremy Powell took charge earlier this year, taking over from Janet Yellen, who wasn’t invited by Trump to serve a second term. Powell has raised rates twice in his time and now Trump has weighed in, claiming he’s “not thrilled” with the rate rises, further adding that he will continue to criticise the Fed if it continues to raise rates. A further two rate rises are expected before the year-end, the next expected to be in September (96% probability). The dollar is lower by 0.43% against the pound at $1.2860 at the time of writing. For good measure, Trump also accused Chinese and European currencies of being manipulated, making respective exports cheaper and more competitive.

The UK’s Public Sector Net Borrowing (PSNB) fell to its lowest level in 16 years, giving Chancellor Phillip Hammond some breathing space ahead of his Autumn Budget. In addition, a £2bn surplus in July was the largest for the month since 2000, although not unusual as the self-employed return self-assessed tax payments. The budget surplus of £2bn is more than double that of last year. Borrowing is expected to continue falling as Hammond keeps the belt tightened on public spending, further adding to his pledge to reduce public debt over the coming years.

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