Tuesday, January 8: markets marched into the green across the globe, lifted by hopes of a US-China trade deal as talks continued overnight in Beijing(FTSE 100: +0.74%). Whilst in the UK, positive Kantar market data for supermarket retailer Tesco led a retail revival, despite Christmas trading results from Morrisons indicative of increasing pressure from discount retailers. Intraday market moves, whilst notable, saw many investors keep capital on the sidelines with trading volumes at just 22% of the 90-day average.
Sales data for the festive period indicated that discounters Aldi & Lidl gained market share in the 12 weeks to 30 December as overall grocery sales rose 1.6% according to Kantar Worldpanel data. Tesco(+3.42%) emerged the winner in the public equity space, as it announced sales growth of 0.6% yoy with investors clearly expecting favourable results on Thursday on the back of this data. This slice of positive retail news lifted Next and M&S as investors drew parallels with discretionary retail stocks.
Morrisons(-3.16%) disappointed the street as results indicated the grocer fell slightly short of analyst’s expectations though full year guidance was rendered unchanged. LFL sales ex. fuel rose 3.6% in the nine weeks to January 6, comprising a 0.6% contribution from retail sales and a 3.0% contribution from wholesale. The retailer announced only yesterday that it would cut prices on nearly 1,000 products, including store cupboard staples as the price war with supermarket discounters intensifies.
At the close European equities were higher, with the FTSE 100 +0.74%, the CAC 40 +1.15% and the DAX 30 +0.52%.