Market Report: Price war worries hit supermarkets

WORRIES THAT supermarkets will be forced into a cut-throat price war sent investors scrambling to the checkouts. Shares of the major groups were hit with the food retail sub-index plunging 5.1 per cent.

As the stock market slithered from its July high, supermarkets, along with utilities, were regarded as sound, defensive shares, suitable investments at times of stress and strain. But with the market now looking a little more steady the safe haven prop has been whipped away at a time when it has become apparent food retailers are struggling to hold their margins.

Sales are under pressure and costs are increasing; there is no longer the comfort of inflation profits and it is feared that in a desperate bid to keep up some form of growth momentum a fierce price war, as opposed to the phoney exercises the supermarketeers have conducted recently, will break out.

Profit forecasts have been cut back lately with BT Alex.Brown saying fundamentals are deteriorating and "are as bad as they have been for many years".

An on-going Monopolies and Mergers Commission probe as well as vague indications of an anti-superstore feeling are other influences. September's retail sales figures failed to offer much comfort.

Asda and Tesco were the hardest hit. There was talk of a big seller in the market, prepared to hammer both shares. Asda, with Seaq putting volume at 27.3 million shares, fell 6.25p to 151p - just 1p above its 12 month low. Tesco, 13.5p off at 159p, was 8p above its low. Turnover was 31.4 million.

J Sainsbury, with interim figures next week, was cut 27.5p to 551.5p. Profits should be around pounds 464m, against pounds 411m, but attention will be concentrated on its like-for-like sales and statement about current trading. Safeway lost 10p to 283p and Somerfield 6p to 410.5p. The cut-price supermarket display helped drag Footsie 45.3 points lower at 5,206.6. In early trading it was up 30.5.

Once again it was a busy session with turnover nudging 1.2 billion shares. October is turning out to be the busiest month of the year.

Confusion over interest rates also helped to put the brake on blue chips. Eddie George, Bank of England Governor, seemed to rule out a cut this month and managed to reinforce fears rates will remain unchanged after next month's Monetary Policy Committee. But at this month's MPC meeting, when rates came down 0.25 percentage points, two of the nine members pushed for a 0.5 percentage point reduction. Supporting shares managed modest headway with the mid cap index up 7.3 to 4,638.1 and the small cap 4.6 to 1,940.3.

Banks continued to recover with Barclays at one time up 39p on ABN Amro enthusiasm. The shares ended 11p higher at 1,227p.

Off-tune EMI led the Footsie leader board, up 16p to 359p. Pearson, on expectations its acquisition of Simon & Schuster, the US specialist publisher, will go through rose 28p to 915p. Cable & Wireless Communications responded to Henderson Crosthwaite support with a 37.5p gain to 432p. Analyst Chris Godsmark has cut his profit forecasts but continues to rate the shares. For the current year he expects pounds 148m, down from pounds 207m, and then pounds 201m against pounds 250m.

BT was little changed at 747p with hopes the cash-rich group will sharply increase future dividends helping the shares. Securicor was 5p firmer at 415p as Alex.Brown said the shares should be around 520p.

CSFB put the skids under transport shares. Stagecoach reversed 23.5p to 218p and FirstGroup 35.5p to 388p. The investment house said it was receiving "mixed" signals on passenger growth.

Scottish & Newcastle was flat, off 43p to 781p, on the Panmure Gordon switch into Bass advice. But Bass, down 10.5p at 769p, had to contend with negative comments from HSBC which also said sell Diageo, at one time off 10.5p. The shares ended 1.5p lower at 581.5p. The Cadbury Schweppes investment presentation seemed to have a soft centre with the shares falling 14p to 805p.

Jeweller Signet sparkled 3.5p higher to 30.25p as a large line was cleared. It seems Deutsche Morgan Grenfell picked up the overhang, around 50 million shares, at 26p and sold them on to institutions at 26.5p. The shares have come down from 51p in the summer.

Tullow Oil, down to 41p earlier this month, hardened 1p to 77p. There is talk the haggling over its Bangladesh development should be resolved at a meeting on Monday. Norbain, a closed circuit TV group, rose 4p to 229p, reflecting the agreed bid for Gardiner. Stockbroker Butterfield says the Gardiner terms make Norbain a "strong buy".

Oxford Molecular, the drugs group, fell 6.5p to 61.5p despite director share buying. The two founders of Cambridge Combinatorial, acquired by Oxford, Dr Ryszard Kobylecki and Dr Allan Marchington, picked up around 10 per cent of Oxford's capital.

SEAQ VOLUME: 1.19 billion


GILTS INDEX: 110.2 -0.16

Suggested Topics
Arts and Entertainment
'A voice untroubled by time': Kate Bush
musicReview: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Life and Style
Cooked up: reducing dietary animal fat might not be as healthy as government advice has led millions of people to believe
healthA look at how governments started advising incorrectly on diets
peopleJustin Bieber accuses papparrazzi of acting 'recklessly' after car crash
Life and Style
Life and Style
Roger Federer is greeted by Michael Jordan following his victory over Marinko Matosevic
tennisRoger Federer gets Michael Jordan's applause following tweener shot in win over Marinko Matosevic
Arts and Entertainment
Oppressive atmosphere: the cast of 'Tyrant'
tvIntroducing Tyrant, one of the most hotly anticipated dramas of the year
Ukrainian Leonid Stadnik, 37, 2.59 meter (8,5 feet) tall, the world's tallest living man, waves as he poses for the media by the Chevrolet Tacuma car presented to him by President of Ukraine Viktor Yushchenko in Kiev on March 24, 2008.
newsPeasant farmer towered at almost 8'5'' - but shunned the limelight
Walter Matthau and Jack Lemmon in ‘The Front Page’, using an old tech typewriter
Life and Style
Could a robot sheepdog find itself working at Skipton Auction Mart?
techModel would allow robots to be programmed to control crowds and save people from burning buildings
ebooksAn evocation of the conflict through the eyes of those who lived through it
Arts and Entertainment
Suha Arraf’s film ‘Villa Touma’ (left) is set in Ramallah and all the actresses are Palestinian
Angel Di Maria poses with Louis van Gaal after signing for Manchester United
sportWinger arrives from Real Madrid and could make debut on Saturday
Arts and Entertainment
Kingston Road in Stockton is being filmed for the second series of Benefits Street
arts + entsFilming for Channel 4 has begun despite local complaints
Arts and Entertainment
Hooked on classical: cellist Rachael Lander began drinking to combat panic attacks
musicThe cellist Rachael Lander’s career was almost destroyed by alcohol she drank to fight stage fright. Now she’s playing with Elbow...
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Client Services Executive / Account Executive - SW London

£23000 - £26000 per annum: Ashdown Group: Account Executive / Client Services ...

PA to CEO / Executive Secretary

£36000 - £38000 per annum: Ashdown Group: Executive PA to CEO & Executive Dire...

Generalist HR Administrator, Tunbridge Wells, Kent - £28,000.

£25000 - £28000 per annum: Ashdown Group: Generalist HR Administrator - Tunbri...

Senior C# Developer (.NET, C#, JMS, TDD, Web API, MVC, integrat

£45000 - £75000 per annum + benefits+bonus+package: Harrington Starr: Senior C...

Day In a Page

Kate Bush, Hammersmith Apollo music review: A preamble, then a coup de théâtre - and suddenly the long wait felt worth it

Kate Bush shows a voice untroubled by time

A preamble, then a coup de théâtre - and suddenly the long wait felt worth it
Robot sheepdog technology could be used to save people from burning buildings

The science of herding is cracked

Mathematical model would allow robots to be programmed to control crowds and save people from burning buildings
Tyrant: Is the world ready for a Middle Eastern 'Dallas'?

This tyrant doesn’t rule

It’s billed as a Middle Eastern ‘Dallas’, so why does Fox’s new drama have a white British star?
Rachael Lander interview: From strung out to playing strings

From strung out to playing strings

Award-winning cellist Rachael Lander’s career was almost destroyed by the alcohol she drank to fight stage fright. Now she’s playing with Elbow and Ellie Goulding
The science of saturated fat: A big fat surprise about nutrition?

A big fat surprise about nutrition?

The science linking saturated fats to heart disease and other health issues has never been sound. Nina Teicholz looks at how governments started advising incorrectly on diets
Emmys 2014 review: Can they genuinely compete with the Oscars

Can they genuinely compete with the Oscars?

The recent Emmy Awards are certainly glamorous, but they can't beat their movie cousins
On the road to nowhere: A Routemaster trip to remember

On the road to nowhere

A Routemaster trip to remember
Hotel India: Mumbai's Taj Mahal Palace leaves its darker days behind

Hotel India

Mumbai's Taj Mahal Palace leaves its darker days behind
10 best pencil cases

Back to school: 10 best pencil cases

Whether it’s their first day at school, uni or a new project, treat the student in your life to some smart stationery
Arsenal vs Besiktas Champions League qualifier: Gunners know battle with Turks is a season-defining fixture

Arsenal know battle with Besiktas is a season-defining fixture

Arsene Wenger admits his below-strength side will have to improve on last week’s show to pass tough test
Pete Jenson: Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought

Pete Jenson: A Different League

Athletic Bilbao’s locals-only transfer policy shows success does not need to be bought
This guitar riff has been voted greatest of all time

The Greatest Guitar Riff of all time

Whole Lotta Votes from Radio 2 listeners
Britain’s superstar ballerina

Britain’s superstar ballerina

Alicia Markova danced... every night of the week and twice on Saturdays
Berlin's Furrie invasion

Berlin's Furrie invasion

2000 fans attended Eurofeurence
‘It was a tidal wave of terror’

‘It was a tidal wave of terror’

Driven to the edge by postpartum psychosis