FTSE in-depth: Dealers shop for bargain retailers
There are only 57 shopping days left until Christmas and things are hotting up in the cut-throat world of food retailing.
Geoff Foster: The Footsie rallied 31.87 points
A price war looms as supermarkets undertake hectic promotional activity in an attempt to attract shoppers ahead of the crucial festive trading season.
Competition in the grocery market is vicious and consumers are already benefiting from buy-one-get-two free and three-for-two deals on many food lines. Promotions this year have come many weeks earlier than they did in 2009.
Supermarkets are hopeful that Joe and Joan Public will enjoy a prosperous Christmas and shrug off worries about January's VAT increase to 20% and what effect government spending cuts will eventually have on their pockets in 2011.
Shore Capital said this week that Christmas 2010 will be 'OK' for supermarkets, despite the woes of the economy.
Analyst Clive Black said: 'Don't underestimate the propensity of the average British household to seek to have a good time when Santa is in town. We expect sound sales and a decent margin out-turn.' He is a fan of Tesco, a fraction easier at 423.9p.
The numero uno grocer recently announced price cuts and promotions worth £800m spread across 18m Clubcard members in the UK. It also flagged its biggest ever November Clubcard statement which because of 'double points' will be giving 16m members £200m in vouchers to help with the festive food bill.
Tesco's shareholders must have been a bit miffed to see chief executive Sir Terry Leahy recently sell £3.3m worth of shares at 432.26p before he steps down early next year. But a bumper Christmas period will make them soon forget.
Wm Morrison, Britain's fourth biggest supermarket, added 1.6p to 295p. It's third quarter figures are due on Thursday and new boss Dalton Philips will no doubt wax lyrical about the group's Christmas loyalty offer, which includes a £5 voucher to encourage shoppers to spend in January.
Excited of late by revived gossip that Arab investor Qatar Holdings, which still sits on a threatening 26% stake, could soon table a knock-out cash offer, J Sainsbury added 4.3p to 387.5p. Analysts still await any specific festive initiatives but Shore's Clive Back says the outperforming retailer has an increasingly effective loyalty programme in place already, embracing its Nectar card.
On the other side of the street, Argos owner Home Retail improved 1.2p to 220.4p but will not welcome reports that 'must-have' Christmas toys such as the Lego City Airport model, priced at £84.99, could be in short supply this year because of a labour shortage in China.
Better-than-expected third-quarter results from Royal Dutch Shell, 10p better at 1987.5p, and a 4.4p rise to 170.65p in mobile phone giant Vodafone, after peer France Telecom announced forecast busting results, helped the Footsie rally 31.87 points to 5,677.89.
Wall Street lost an early gain of 222 points to trade 50 lower ahead of today's US third quarter gross domestic product data. Dealers say it could give a further clue as to the Federal Reserve's intentions regarding further quantitative easing to help stimulate the world's biggest economy. Early enthusiasm followed news that US jobless claims fell unexpectedly last month to 434,000, the lowest level in three months.
Inmarsat advanced 17p to 655p on a Liberum Capital buy recommendation and vague gossip that Harbinger Capital has been approached to name a price for its remaining 14% stake in the satellite telecoms company. Harbinger earlier this month banked £410m by selling half of its 28% shareholding at 630p a share.
There's a big surprise, no £2 a share takeover approach or an oil strike in the Falklands. Desire Petroleum crashed to 88p and closed 26.75p, or 23pc, lower at 91.25p after the company disappointed day traders and bulletin board followers with a 'no change' statement.
Shares of black cab manufacturer Manganese Bronze accelerated a further 18p, or 26%, to 86p. They have more-than-doubled in a week on continuing hopes that 20% shareholder Geely, China's privately-owned carmaker and owner of Volvo cars, will soon return with a knock-out bid.
Struggling broadcaster ITV firmed 0.45p to 67.8p after JP Morgan Cazenove lifted its target price to 82p from 69p. The broker points out the stock has risen 15% over the past five weeks but advises clients that there is plenty more to go for.
Buyers switched on to property website company Rightmove, 30p up at 811p, ahead of next Tuesday's trading statement. Altium is positive and says the company will again demonstrate the benefits of its dominant market position and the resilience of its subscription based revenue model.
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