FTSE rises as Tesco shares bounce back
A rally by Tesco helped to lift Britain’s top equity index on Thursday, as investors warmed to the supermarket group’s restructuring plans.
The FTSE 100 index was up by 1.3 percent at 6,503.04 points in early trading.
Tesco was the best-performing stock in the index in percentage terms, rising 5 percent after Britain’s biggest grocer announced plans to sell assets and cut hundreds of millions of pounds of costs to fund lower prices in store.
Global stock markets were also supported by the minutes from the U.S. Federal Reserve’s recent meeting, which reassured investors that the Fed was in no hurry to start raising rates.
Tesco has been hit by a string of profit warnings, but traders said the company’s restructuring proposals were a step in the right direction.
“Tesco is focused on improving its competitiveness and building its image back up among its clients, which we think is key for the company if they want to battle the cheap grocery stores such as Aldi and Lidl,” said AvaTrade’s chief market analyst, Naeem Aslam.
Tesco’s gains also pulled up the shares of rival grocers Sainsbury and WM Morrison, but Marks & Spencer fell 2.9 percent after posting a worse-than-expected 5.8 percent drop in underlying sales of clothing, gifts and homeware over Christmas.
“Debt levels remain over 2 billion pounds and the company has a pension deficit to fund, which will likely limit the potential for accelerated dividend payouts,” said Cantor Fitzgerald analyst Freddie George, commenting on M&S.
Source: Reuters – FTSE rises as Tesco shares bounce back
