Don't sound the death knell for the "big four" supermarkets just yet – price cuts may just hold off the marauding discounters.
The three London-listed grocers – Morrisons, Tesco and Sainsbury's – enjoyed a late-afternoon bounce yesterday after it was revealed that Asda returned to sales growth in the first quarter. It was only a 0.1 per cent rise, however. Sales fell in the previous quarter and the uptick followed the start of a £1bn price-cutting drive. But it suggests others adopting similar strategies may be able to stem the tide of customers defecting to the likes of Aldi and Lidl.
Morrisons, which has also put £1bn towards price cuts, was the top performer, adding 8.9p to 205.2p. Tesco's shares rose 6.25p to 302.55p, while Sainsbury's added 5.1p to 332.8p.
Airlines came back to earth after an update from Thomas Cook, off 22.5p at 156.1p, that showed summer holiday bookings and yields falling. With fewer people planning to fly abroad, easyJet lost 112p to 1,550p and British Airways owner IAG fell 23.2p to 365.7p.
The pair helped to end the FTSE 100's two-day rally, with the index down 37.6 points at 6,840.89. ITV, off 9.5p at 169.6p, and Barratt Developments, 19.2p lower at 357.8p, were two other big fallers. But commentators are still confident that the Footsie will soon beat 1999's record close of 6,950.6. Rebecca O'Keeffe, of Interactive Investor, said: "With interest rates set to remain low and the market awash with liquidity, the outlook for equities is generally good."
On the FTSE 250, shares in Infinis rose 3.9p to 206p after Deutsche Bank said fears that the renewable energy group would not meet dividend commitments were overdone.
The Asia-focused Salamander Energy is reportedly close to sealing a deal to sell itself for up to £2 a share, with Thai oil giant PTT named as a front- runner. Salamander close up 1p at 144.75p.
Small-cap Optos, which makes cameras that take pictures of retinas, leapt by 8p to 176.25p after it said it had almost halved its debt in the past six months.
The Aim-listed recruiter Staffline shot up 117p to 889p after it announced a £65.6m deal to take over the welfare-to-work operator Avanta.Reuse content