Spreadex Market Update

Lack of escalation allows markets moments to rebound, Morrisons sales slump



Following on from the Dow Jones’ gains at the end of yesterday’s session, and green boards in Asia overnight, the European markets rebounded at the start of Tuesday morning.

A general lack of update on the US-Iran situation – or, rather, the absence of any further escalation after the initial flurry of responses to the assassination of Qassem Suleimani – appeared to cause investors to dip back into the markets.

The Dow Jones finished up at 28700 on Monday, dragging itself from its sub-28400 lows, and is now only a 200-point stretch from the all-time highs struck at the start of the year. This led onto a 1.6% rise for the Nikkei, a 0.34% increase for the Hang Seng and a 0.69% jump from the Shanghai Composite, in turn sowing the seeds for a positive open in Europe.

The FTSE, which has managed to avoid the worst of the US-Iran losses thanks to the presence of BP, Shell and BAE Systems in its make-up, could only add 0.1%, keeping it the wrong side of 7600. The fact the pound saw a second day of gains, following on from Monday’s services PMI-assisted rebound, didn’t help. Sterling climbed 0.3% against dollar and euro alike, taking it to $1.32 and €1.18 respectively.

In contrast the DAX saw another big swing as it added 1% – still, however, leaving it 200 points off where it was on the 2nd January. The CAC, meanwhile, rose 0.7% to hit 6050.

Despite an ‘unusually challenging’ Christmas Morrisons still managed to add 3% on Tuesday, the supermarket back to £1.98 having struck £1.92 on Monday. The company suffered a 1.7% drop in like-for-like sales (excluding fuel) across the 22 weeks to January 5th, compared to the 3.6% rise seen for the same period last year. Investors will perhaps take comfort in the fact that upstart Aldi also saw a slowdown in sales growth yesterday. Ditto that Morrisons full year pre-tax profit forecasts remain with the band of current analyst expectations.

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