In another fingers in ears moment, European investors ignored the outcome of the latest Federal Reserve bank stress tests to inch higher on Friday morning.
The Fed warned that loan losses in the aftermath of the covid-19 pandemic could hit a staggering $700 billion. Yet Jerome Powell and co. didn’t then announce any particularly drastic measures to combat this, banning share buybacks – something that many bank had already abandoned – while keeping dividends intact at their current levels.
It seems that investors have read this tepid response as a green light to keep buying, if at a relatively measured pace. The FTSE led the pack, adding 0.7% as it re-crossed 6200, with the DAX up 0.4% and the CAC rising 0.6%.
Europe may find its growth challenged, however, when it comes time for the US open. The Dow Jones is currently set to lose half of yesterday’s late surge, the futures pointing to a 160 point fall, one that would take the index back under 25600.
Tesco (LON:TSCO) didn’t get much of a rub from its Q1 statement on Friday, instead trickling 0.2% lower in its wake despite an 8% rise in group sales to £13.4 billion. The supermarket saw a 9.2% rise in UK & Ireland sales specifically, with a 12% jump in food sales in the UK. Tesco said that, though shoppers are obviously making fewer trips to its stores, the amount being bought in each individual visit has risen by 64%.
What was perhaps the sticking point for investors, however, was the news that coronavirus-related costs will run as high as £840 million this financial year, as Tesco tries to both improve its online performance and manage the various staffing issues caused by the pandemic.
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