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Tesco (-1.9%) Nobody was expecting anything all that positive from Tesco but the fact that profits more than halved in H1 from £779m to £354m. Like for like sales were also down 1.1% and there was a note of caution from management that trading conditions will continue to be challenging. Nevertheless, pre-tax profit was £74m, a great deal better than the £19m loss posted last year. The new national living wage is also set to pose a problem for the supermarket chain, costing £500m by 2020 and expected to put even more pressure on weak profit margins. Also the company is not paying an interim dividend which will likely put off some of the income investors.
Tesco’s peers are not doing much better with Morrison falling 0.5% and Sainsbury shedding 0.9%.
Marks & Spencer (-2.41%) JPM downgrade . ‘’We expect another quarter of negative LFL performance from M&S in General Merchandise and are also concerned that LFL growth in the Food business is becoming harder to achieve. With our new TP of 550p (from 600p) offering only 6% upside to the current share price, we reduce our recommendation to Neutral.
SAB Miller (+2.5%) following yesterday’s refusal, Budweiser maker, Anheuser-Busch InBev NV has now bid 42.15 pounds a share in cash. For now, it’s uncertain if this will be acceptable and investors, judging by the muted response in the share price this morning are cautious and probably more than a little dubious that this deal will go ahead.
The transaction would be the biggest of 2015 and the fourth-largest takeover ever.
Anglo American (+4.55%) Raised to equal weight at Morgan Stanley. |Rio Tinto +5% Raised to overweight. Morgan Stanley state that stable data from China in the past few months has spurred this upgrade, potential uplift from stimulus policies increased conviction that the 19% commodity uplift by 2017 is achievable. Forcing supply disciple on the mining companies will also be an elevator to commodity prices.
Easyjet (-3%) - some profit taking following yesterday’s upside. The pop higher in oil prices may also become a factor for the airline industry should the present move prove sustainable. U.S. crude closed at nearly a three-month high yesterday after a new U.S. forecast showed tighter oil supplies next year, while Russia, Saudi Arabia and other big producers hinted at further talks to support the market.
IAG (– 2.98%)
Standard Chartered (+1.92%)Heinz Hilger announced as new Germany head. Standard Chartered just launched a fintech accelerator programme to help companies crack the Asian market.
Old Mutual (+2.72%) Underpriced and underrated according to Barclays- upgraded to Overweight