Reports of progress in the Brexit negotiations between the UK and European Union supported share prices on Thursday (1 October). The FTSE 100 closed 0.23% higher at 5879.45.
SECTOR IN FOCUS
Online grocery shopping soared during lockdown – and it seems investors believe the trend could become permanent.
This week online grocer Ocado Group plc (OCDO) briefly overtook Tesco plc (TSCO) as the UK’s most valuable supermarket.
Many are taking this as a sign that investors are backing online sales to be a significant part of the market in the future.
Ocado, which only launched in 2000, was worth £21.7bn by close of play Tuesday, slightly more than Tesco’s £21.1bn valuation. Tesco has since reclaimed top spot since then, however – albeit marginally.
What some investors might find hard to understand is how Ocado, a supermarket with just a 1.7% share of the market, compared with Tesco’s 26.8% share, according to analysts Kantar, is worth so much.
Being experts in online ordering and delivery, Ocado is thought to have benefitted greatly from a general shift to online grocery shopping during lockdown. It’s tie-up to provide delivery services for Marks & Spencer has also been hailed as a masterstroke by some observers.
However, critics point to the Ocado’s poor track record in producing consistent profits.
Will the mooted shift to online shopping change that? Only time will tell.
The Bank of England’s chief economist has warned that overly pessimistic predictions about the economy risk holding back its post-lockdown recovery.
In a swipe at those wanting to talk down the UK’s economy, Andy Haldane told commentators that “now is not the time for the economics of Chicken Licken”, referencing the children’s character who worried the sky would fall.
According to the BBC, he added: “My concern at present is that good news on the economy is being crowded out by fears about the future.”
Haldane’s intervention comes as official figures confirmed that the UK’s economy shrank 19.8% in the second quarter, slightly less than first thought but still the worst slump of any major economy.
However, the economy has grown for three consecutive months since the low point in April, making up roughly half of the ground it has lost since the start of the coronavirus pandemic.
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7th October – Supermarket giant Tesco plc’s (TSCO) recent results have impressed, despite coronavirus. However, with the economy still in recovery mode and a potential no-deal Brexit on the horizon, there are still many obstacles to navigate. It reports its interim results on Wednesday (7 October).
9th October – After recovering sharply following the market sell-off in March, Motorpoint Group plc’s (MOTR) shares have stalled of late. That said, sales are looking relatively buoyant and so there are no obvious sources of bad news when it releases its latest trading update on Thursday (8 October).