Market Report: Investors decide Tesco and Morrisons are past their sell-by date

Investors decided Tesco and Morrisons were past their sell-by date after more doom and gloom in the supermarket sector.

It was the turn of Deutsche Bank’s number crunchers to express their concerns about the big listed grocers, whose margins have felt the strain of the German discount chains Aldi and Lidl.

Lead analyst Niamh McSherry says she sees “little reason” to expect margins to recover materially, with most tipsters forecasting a fall from 5 per cent historically to around 2.5 per cent.

Tesco’s margins are historically higher than those of its peers, but Ms McSherry expects the premium to narrow.

She cut her rating on the UK’s biggest grocer from buy to hold, causing a 3.3p fall to 175.25p, while a downgrade to sell on Morrisons, the smallest of the so-called “Big Four” supermarkets, triggered a 4.3p drop to 159.5p.

Sainsbury’s, down just 0.7p at 272.6p, managed to maintain its hold recommendation, with the broker predicting it can prove its critics wrong ahead of Wednesday’s half-year results.

Miners dragged blue-chips into the red as the FTSE 100 finished 19.88 off at 6,275.28.

Industrial metals prices tumbled further, inflicting more pain on beaten-up Anglo American, whacked 24.25p lower to 491.75p, and battered Glencore, down 4.65p to 105.05p.

Analysts at Barclays painted a bleak picture of the outlook for miners saying: “The past five years have been the worst period of performance since 1966. Looking forward it is hard to see what might pull the sector out of its tailspin.”

Experian topped the FTSE, surging 83p to 1,187p after the credit-checker shrugged off last month’s hack that exposed the details of 15 million US customers who applied to use its service through T-Mobile. The attack cost it just $20m in one-off costs, although it has received “a number of class actions” and warned that it was too early to predict the effect of the regulatory and government investigations or legal action.

Profit warning-prone Speedy Hire jumped 2.25p to 31.25p as the tool hire firm stuck by its full-year targets at the halfway stage.