Supermarket woes damage investments
Sainsbury's stock fell 7 per cent to a six-year low, having fallen more than 40 per cent since last November, after it reported that like-for-like sales for the second quarter fell 2.8 per cent and there was unlikely to be any respite in the months ahead.
The FTSE 100 Index fell sharply by 65.2 points to 6557.5 as Sainsbury's said that deflation had hit many areas of its business. This came as the closely-watched CIPS/Markit PMI survey for the manufacturing sector gave a worse-than-expected reading of 51.6, down from 52.5 in August.
A figure above 50 indicates growth but the slowdown alarmed traders and put pressure on the pound amid diminishing signs that the Bank of England will hike interest rates before February. In the US, a similar index showed manufacturing also rose by less than economists had expected.
Sterling was lower against the US dollar, at 1.62, but still stronger versus the Euro, at 1.29, as attention turned to tomorrow's meeting of the European Central Bank.
Supermarkets occupied the top of the FTSE 100 Index fallers board after the update from Sainsbury's prompted one City firm to cut its profits forecast by around 17 per cent.
Unveiling his first set of figures since taking over as chief executive, Mike Coupe said: "The reality is that the market has changed more rapidly in the last three to six months than I've seen in my 30 years in the industry."
Sainsbury's shares were the biggest faller in the top flight at 7 per cent lower – off 17.5p to 234p – while Tesco fell 6p to 180.2p as the Financial Conduct Authority launched a probe into the grocery chain's recent £250 million overstatement of profits.
Morrisons shares were down 5 per cent or 8.4p to 159.9p amid fears that it will be the biggest casualty if its larger rivals decade to step up the sector's ongoing price war.
Source: westerndailypress.co.uk
