Tesco is taking the axe to 1,700 shop floor and warehouse jobs in a bid to become more profitable (more below) and simpler. Meanwhile the pound crossed the $1.39 threshold to hurtle to 1.3961 earlier, up more than +0.50% at close to 4pm.
Sterling was also up by a similar amount against the euro coming close to 1.14. If better UK wage and Q4 GDP data emerges later this week (Wednesday & Friday), that could push sterling to 1.15. Sterling’s climb though didn’t do much for the FTSE 100, falling more than -0.25% to 7,710 earlier though both German and French stocks lifted again with the Dax edging an all-time high.
Technically the US dollar, in contrast to sterling, should be recovering thanks to steadily climbing US interest rates and more corporate cash being returned home as a result of Trump’s tax code changes. But it isn’t happening yet.
"We continue to think the market is ignoring USD upside risks in the first half of the year, while simultaneously over-emphasising the positive and well-priced ECB ‘normalisation" story,’ a Merrill Lynch team said recently.
- UK FTSE 100 7,715 -0.20%
- DAX 13,456.73 +0.17%
- CAC 40 5,538.64 +0.22%
- Euro Stoxx 600 401.84 +0.25%
- Dow 26,105.36 +0.12%
- S&P 500 2,819.11 +0.31%
- Nasdaq 7,366.92 +0.42%
- Nikkei 225 23,816.33 +0.03%
- Gold 1,332.60 -0.04%
- Oil WTI 63.38 +0.02%
Tesco trims jobs to return to core basics
Tesco earlier announced it was slashing shop floor job numbers by 1,700 though it will be providing 900 new roles allowing leeway for some staff to transfer.
“Our priority now is to support affected colleagues through these changes in any way we can,” says new UK Tesco boss Matt Davies. “We hope to retain as many colleagues as possible in the new roles we have created and in the vacancies we currently have available.”
Tesco shares were unmoved by the news, slipping -0.70% to 206.00p. Its shares are up +30% in the last two years and +11% higher in the last three months. However there is substantial underlying profit and growth anxiety right across the grocery sector (bar players like Aldi and Lidl who continue to filch market share from Tesco).
“Despite the market pricing in hopes of a turnaround in 2018, we expect meagre share price returns for the major grocers as our latest data do not support a materially better outlook, with food volume growth effectively zero," Credit Suisse analysts said.
Stocks ignore US government shutdown
Earlier on Wall Street the US government closedown did not seem to bother stocks one hair. The Dow was trading down just -0.05% mid-afternoon UK time while the tech-heavy Nasdaq had surged +0.50% to 7,370.
Investors were looking over their shoulder at previous closures – three major ones since 1990 - which barely dented stock market fundamentals.
However the lack of a deal completely goes against the boasting of the King Dealmaker himself. Where is the skill transfer from real estate to Washington here? Immigration – a key sticking point of the current closure – is however a massively partisan issue. Accusation and counter-accusation will continue to fly for the moment.