Supermarket price crash

As I am sure you are aware Tesco has become ever journalist’s whipping boy this week as it finally emerged that they have not had a chief financial officer in place for some months five months before the latest £250 million accounting error came to light.

Shares in the giant retailer were dumped by institutional investors and have lost around 15% of their value since Monday. There was contagion in the sector as the story of falling profit margins and competition from German discounters piled on the pressure with Sainsburys also having a week to forget as their stock price dropped 5%.

All of this weighed heavily on the FTSE 100 which was down nearly 3% on the week effectively wiping out the last six months progress at a stroke and proving once again that diversification is king and putting all your eggs in one supermarkets basket is certainly not a good idea.

Markets back at year 2000 levels

Political unrest in the Middle East and Russia continued to fill the media headlines but as dealers returned to their desks after the Summer holidays the investment markets adopted a positive stance. The FTSE managed to hit a 14 year high on Wednesday on the back of an agreed cease fire in the Ukraine but then staled as the efforts seemed to break down. Ten years ago all this uncertainty would have undoubtedly have had more impact on the leading share indexes and perhaps this is testament to the strength of the western economic recovery,or maybe the US`s new found fuel independence?

Calm returns

It was a much steadier week for the markets on both sides of The Atlantic as the FTSE 100 climbed to a three week high and the US Dow Jones improved 2% to regain the 17,000 level. This despite the Bank of England`s minutes confirming that two out of the nine members who set interest rates voted for an increase this month.

The two big pharmaceutical firms Astra Zenica and GlaxoSmithKline both made progress on speculation of US takeovers as the American suitors focused on big potential future profits to be made from a maturing population.

As we approach the end of the holiday season more activity is expected from next week,so hang on to your hats for a ride that will see increased volumes of trading and more mergers and acquisitions as corporate cash looks for a rewarding home.

 

Nursing Europe out of intensive care

Events in the middle east and Ukraine have  absorbed traders in the city over the past couple of weeks with swings in the fortune of both European & US stocks been influenced by political and military actions.So far despite all the activity the FTSE 100 index is little changed for August but it is still down by around 1% since the beginning of the year and whilst this is extremely disappointing when we consider the international turmoil in and around the oil states the position could be considerably worse.

Europe`s economic growth has finally stagnated with even the mighty Germany posting negative economic growth in the last quarter and the rest of the member nations struggling to reduce unemployment and trim their debt levels. There is clearly no magic solution but the European Central Bank  says it stands to do more and is committed to using “unconventional instruments” whatever they are to maintain confidence. The announcement caused stock markets on the other side of the Channel to rise today with a hope of more stimulus measures.

Still a lot more TLC needed here then.

Good news tuning sour

In a week where the US economy was shown to have roared back into life, after a poor start to the year, you might have expected better performance from the markets.The FTSE 100 London index drifted down over the week and was hit today by the 2% drop on Wall Street on Thursday. Traders got spooked by the US growth figures that point to a possible 4% rise for the year which would suggest a rise in interest rates soon and further withdrawal of government stimulus. They clearly don`t believe Federal Reserve chairman Janet Yellen then,who only recently stated that the central bank planned to leave interest rates low for a “considerable period”.