It appears that the markets are using the pre-ECB meeting calm as a chance to, if not pause, then somewhat catch their breath.
By the looks of things, investors aren’t expecting too much support from Christine Lagarde and her peers. The CAC slipped 0.4%, with the DAX down 0.1%, yesterday’s rebound already losing steam.
Still, the size of those moves suggests that the markets are happy to hold off on anything big until they see whether the ECB has got a change in direction planned.
The FTSE, which had clawed its way back above 6000 on Wednesday, found itself back under that key level following a 0.7% drop. Its commodity sector was a major issue – a 1.7% reversal from copper prompted a wave of losses from its miners, while BP (LON:BP) and Shell (LON:RDSa) were down 1.5% and 0.6% respectively.
Announcing that its half-year pre-tax profit had fallen by 25.3% to £148 million, Morrisons (LON:MRW) revealed a nasty surge in covid-related costs, running to £155 million as it took on an additional 45,000 staff to deal with demand. And though this hit was offset by business relief rates coming in at £93 million, it nevertheless took a £62 million chunk out of its back pocket.
The supermarket’s update pretty succinctly captured the state of the UK supermarket sector, and the double-edged sword of the covid-crisis. An 8.7% increase in like-for-like sales reflected the sharp upswing in purchases during the peak lockdown period, but with a 1.1% drop in total revenues pointing to the costly decline in fuel sales as people were forced to stay at home.
The reaction to Morrison’s update contributed to the FTSE’s problems, with the supermarket stock slumping by 4.5%. This also sent a ripple of concern down the aisles of its peers, with Sainsbury’s slipping 2% and Tesco (LON:TSCO) falling 1.4%. Even their online cousin wasn’t immune from a bit of anxiety, with Ocado (LON:OCDO) dipping 1.1%.
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