Food retailers dominate FTSE

Tesco’s better-than-expected figures finally give the markets something other than Greece to focus on.


A Tesco metro sign
Source: Bloomberg

The only progress made yesterday in discussions surrounding Greek debt was on when the deadline might be. Angela Merkel made it quite clear that progress on these discussions needs to be imminent while her Austrian counterpart suggested that Sunday was now the new deadline.

Under normal circumstances we should have seen the Greek debt discussion move onto next month’s repayment of €3.2 billion back to the European Central Bank. This repayment is especially important as it is the ECB who have overseen the ELA payments to the Greek banks that now totals at just over €90 billion.

As patience with Greece continues to wear thin we look set for several days of conflicting quotes as European politicians use a variety of ‘carrot and stick’ quotes in an effort to shepherd the Greeks into action.

Tesco tops the list of FTSE movers, while the index is dominated by the food retail sector with both Morrisons and Sainsbury’s jumping on their coat tails. Although Tesco has seen sales drop by 1.3% this is better than expected and an improvement on last year’s fall of 4%, and this has seen the shares climb by more than 3.5% in early trading.

These figures have ensured that CEO Dave Lewis has at least started the day in a positive fashion, but with the agenda for today’s AGM likely to contain difficult questions about management remuneration, ongoing costs of historic account irregularities, pension deficits and the difficult market conditions he will be doing well to remain this upbeat by day’s end.

Regardless of the bad press NIKE’s corporate image might have suffered the company’s sales have suffered no ill effects. Posting its fourth-quarter figures after the market close last night, the shares rose by more than 3% in afterhours trading. The consequences of a future orders booking jumping by 13% outweighed the losses incurred from the company’s currency exposure.

Once again it is likely to be external factors coming from Europe that give US equity markets a sense of direction as only the latest University of Michigan data is due for release today.

Ahead of the open we expect the Dow Jones to start 11 points higher at 17,901.

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