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FTSE 100 Live: US markets lowest since late 2020, Tesco posts update

·6-min read
 (Evening Standard)
(Evening Standard)

Another grim week for investors is ending with US benchmarks at their lowest level since late 2020 as global recession fears mount.

The 0.75% hike in interest rates by the Federal Reserve triggered Thursday’s major sell-off, with the FTSE 100 index down by 3% and consumer stocks hit heavily.

Tesco boss Ken Murphy today described conditions as “incredibly challenging” amid early indications of changing customer behaviour due to inflation pressures. He reported UK underlying sales 8.1% higher than the same pre-pandemic quarter.

FTSE 100 Live Friday

  • Markets calmer after recession-fuelled sell-off

  • Tesco warns of “unprecedented” inflation pressures

FTSE 100 rallies, BP under pressure

10:19 , Graeme Evans

A chaotic week for investors after central banks hit the accelerator on interest rates finished with oil giants BP and Shell under more selling pressure today.

Their declines of more than 1% reflected the weaker demand outlook after the US Federal Reserve’s 0.75% hike in rates, as well as the 0.25% move by the Bank of England.

The FTSE 100 index lost 3% yesterday to seal a third week in a row in the red as it became clear to investors that elevated inflation is the number one priority for central banks, even if that means triggering a recession.

AJ Bell’s investment director Russ Mould said: “Rising inflation, rising interest rates and a rising chance of a recession have all served to turn stomachs in equity-land.”

The FTSE 100 has fallen by about 6% this year, although that’s a major outperformance compared with the S&P 500 being down 24% and the Nasdaq a third lower.

Despite today’s losses for commodity-focused stocks, the FTSE 100 index improved 50.67 points to 7095.65 as investors picked up companies trading at historically low levels.

Grocery technology business Ocado, which is back where it was in 2018, led the way with a gain of 4% while Scottish Mortgage Investment Trust improved 24p to 694.6p.

The FTSE 250 index rallied 234.60 points to 18,962.08, with Aston Martin Lagonda up by 12% and magazine publisher Future 5% stronger after a reassuring update.

Tesco warns on cost of food

09:54 , Simon English

TESCO said customers are facing “unprecedented” inflation pressures and are trading down to cheaper items as it pledged to do everything it could to support those struggling most.

One day after the Bank of England said inflation will hit 11% in October and with charities warning that more people are skipping meals or relying on food banks, Tesco said UK sales are down 1.5% in the first quarter.

That fall would have been far greater were rising costs not sending the cost of almost everything higher.

Tesco CEO Ken Murphy, facing some pressure for a recently revealed near £5 million pay deal, said: “Inflation is very real for everyone. Staying competitive on price is the most important thing we can do.”

With Aldi and Lidl snapping at its heels for market share, Tesco has pledged to do everything it can to be the last supermarket to pass on inflation costs to customers.

Some in the City say its relationship with suppliers might hinder that.

Alex Smith at Third Bridge: “Tesco’s market leadership gives it more bargaining power to negotiate down prices with suppliers. However, its relatively limited product range and fragile reputation means it can’t push negotiations too far.”

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FTSE 100 steady, Tesco shares fall

08:35 , Graeme Evans

The FTSE 100 index is broadly unchanged at 7037 after yesterday’s heavy selling.

The risers board shows modest recoveries for JD Sports Fashion, Scottish Mortgage Investment Trust and Ocado, with gains of between 1% and 2%.

Shares in commodities giant Glencore lifted 5.15p to 469.15p as it said first half earnings at its marketing division had been boosted by extreme market volatility, supply disruption and tight physical market conditions.

Tesco failed to benefit from today’s in-line trading update as fears over the current challenging conditions sent shares down 1.3p to 248.4p.

The FTSE 250 index rose 91.29 points to 18,818.77, with magazine publisher Future up 4% on relief that it remains on track to meet 2022 guidance.

Tesco grows share in “challenging” market

08:11 , Graeme Evans

Tesco boss Ken Murphy today described the market environment as “incredibly challenging”, adding that there were early indications of changing customer behaviour as a result of inflation pressures.

He said: “Customers are facing unprecedented increases in the cost of living and it is therefore even more important that we work with our supplier partners to mitigate as much inflation as possible."

His comments came as the supermarket, which holds its AGM today, said it had grown UK market share in the first quarter of its financial year.

Sales for the 13 weeks to 28 May were down in the UK by 1.5% on a like-for-like basis, but 8.1% higher than the same pre-pandemic period.

At Tesco’s wholesale business Booker, sales benefited from particularly strong demand from caterers to rise by 19.4% on a year earlier. Tesco added that its guidance for the financial year was unchanged.

Markets steady after recession-driven slump

07:49 , Graeme Evans

Recession fears triggered by a week of interest rate rises left stock markets a sea of red on Thursday, with leading US indices at levels not seen since the end of 2020.

The S&P 500 index lost more than 3% and the Nasdaq fell 4%, while the Dow Jones Industrial Average is near bear market territory after closing below 30,000.

The selling pressure came after the Federal Reserve’s big 75 basis points increase in interest rates fuelled recession fears in the global economy.

The FTSE 100 index suffered its biggest one-day loss in three months after falling 3% but is expected to open moderately higher today, up 40 points at 7085.

Futures markets are pointing to a modest recovery on Wall Street, although the same was said at the start of yesterday’s session prior to sentiment turning in dramatic fashion.

The pound rallied yesterday despite the Bank of England deciding not to increase interest rates by half a percentage point. Analysts appear to be pricing the likelihood that the Bank will have to be much more aggressive when it meets next in August.

Sterling fell back 0.7% to $1.227 but is still above two-year lows seen earlier this week.

There was little respite for cryptocurrency investors, however, as the price Bitcoin tested the $20,000 threshold after heavy selling in recent days.

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