Tesco's shares slide following profit warning

In mid-morning trading the FTSE 100 is down 71 points at 6600, as Tesco’s profit warning has taken its toll on the retail sector.

A Tesco branch
Source: Bloomberg

The London market is suffering from a broad selloff. Retail, natural resources and financials are in the red today as all the negative news has come at once.

The Greek government has brought forward the presidential vote by two months to try and bring some political stability to the country, but all it has done is bring financial uncertainty to the entire European banking sector.

A sharp swing into the red in Hong Kong has renewed fears that China’s cracks are beginning to show. Keeping with the latest trend, mineral extractors are enduring another tough day. 

Tesco’s shares are being trounced after the supermarket released another sudden profit warning. Year to date the stock has lost over 50% of its value, and the decline has been accelerated by the accounting scandal and the investigation by the Serious Fraud Office. Dave Lewis was drafted in ahead of schedule in the hope that he could restore confidence, but that hasn’t prevented the share price falling to an 11-year low.

There is speculation that Sainsbury’s could be a takeover target. International bidders may hold fire on the UK supermarket market sector until the Christmas figures are released in the New Year.

ASOS is feeling the pressure in international markets as the strength of the pound is hindering eurozone sales. Despite disappointing sales in Russia, the company’s full-year outlook remains on track as Black Friday was a record day for the online retailer. 

In the US, we are calling the Dow Jones down 50 points at 17,802, as the Federal Reserve suggested that a number of major US banks needed to beef up their balance sheets.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.