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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 71% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Tesco share price dips while Marks & Spencer share price drops sharply

Christmas updates from Tesco and M&S have not been greeted too enthusiastically by investors, despite a profit upgrade from the former.

Tesco Source: Bloomberg

Tesco share price dips while Marks & Spencer share price drops sharply

Both Tesco and M&S have reported strong sales figures over the festive period, with Tesco raising its profit forecast for the full year. Tesco's sales were boosted by strong demand for fresh goods and its premium Finest range, while M&S saw robust demand in both its food and clothing businesses.

However, M&S has warned of an uncertain outlook for the coming year, citing consumer and geopolitical risks. Despite the positive sales figures, M&S shares fell more than 5% in early trade.

Tesco also announced price cuts on nearly 2,700 products to compete with discount rivals. Overall, Tesco expects its retail operating profits to reach £2.75bn for the full year, exceeding its previous guidance range. Tesco shares initially opened higher off the back of the upgraded profit forecast, but have since lost ground slightly.

As the big winner of 2023, it was perhaps difficult for M&S to release any kind of statement to drive its shares higher. Instead, investors continue to trim their holdings for the time being. Meanwhile, Tesco, which did see a share price rally in 2023, perhaps has more upside ahead of it, thanks to the increased market share.

Technical analysis on the Marks & Spencer and Tesco share price

The Marks & Spencer share price has taken a hit, gapping lower on Thursday and reaching the mid-November high at 260.5 pence which, together with the mid-December low at 254.0p may offer support.

Marks & Spencer Daily Chart

Marks & Spencer Daily Chart Source: TradingView
Marks & Spencer Daily Chart Source: TradingView

Were the above mentioned support zone to give way, the September peak with the late-November low at 246.4p to 245.9p may offer support instead. Further down the March-to-January uptrend line can be spotted at 236.2p.

For the Marks & Spencer share price to resume its long-term ascent from its October 2022 low, this week’s price gap at 271.1p to 276.4p would first of all need to get filled. If so, this week’s high at 293.2p, together with the minor psychological 300p mark, may be back in play.

With regards to the Tesco share price, despite also taking a beating on Thursday, it remains within a clearly defined medium-term uptrend and will continue to do so while the August-to-January uptrend channel support line at 287.8p underpins.

Nonetheless Thursday’s failure to overcome the current January high at 303.7p before reversing to the downside does point to at least an interim top being formed with the May peak at 285.3p representing the first downside target.

Tesco Daily Chart

Tesco Daily Chart Source: TradingView
Tesco Daily Chart Source: TradingView

Below the uptrend channel support line at 287.8p the October and November peaks and late-December low at 287.0p to 283.6p may offer support, if revisited at all.

The long-term bullish trend in the Tesco share price will remain valid while the share stays above its December trough at 277.8p.

Analysts recommendations

Fundamental analysts are rating Marks & Spencer as a ‘buy’ with Refinitiv data showing 4 strong buy, 6 buy and 8 hold - with the mean of estimates suggesting a long-term price target of 243 pence for the share, roughly 10% above the share’s current price (as of 11 January 2024).

They are also rating TESCO as a ‘buy’ with Refinitiv data showing 3 strong buy, 8 buy, 3 hold and 1 sell - with the mean of estimates suggesting a long-term price target of 322 pence for the share, roughly 9% above the share’s current price (as of 11 January 2024).

M&S Tesco analysts Source: Refinitiv
M&S Tesco analysts Source: Refinitiv

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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