Market Report: Morrisons returns to the top flight after a three-month absence

A day after its tie-up with Amazon was unveiled, HSBC kept Morrisons’ red-hot run going by topping up its target price by 30p to 180p

Morrisons will supply groceries to Amazon customers in the UK under a new deal with the US online giant. (Getty)

The timing of Morrisons’ shock fresh foods deal with Amazon couldn’t have been better. The supermarket group, which last year was on a losing streak that culminated in its relegation from the FTSE 100, has since leapt 35 per cent – enough to lift it back into the top flight after a three-month absence.

A day after its tie-up with the US giant was unveiled, HSBC kept Morrisons’ red-hot run going by topping up its target price by 30p to 180p. While the broker warned that Amazon could undercut Morrisons’ prices, it conceded Amazon’s arrival in the UK grocery market is “coming in any case” so “doing a deal with the inevitable is better than being in denial”.

HSBC’s hold stance remains, but the higher target price tickled investors’ taste buds and the shares were 4.1p fresher at 203.1p. Its market value is now £4.8bn, just £200m lower than that of Sainsbury’s, which has missed out on this year’s supermarket rally amid a scrap for Argos owner Home Retail Group.

Sports Direct, Mike Ashley’s sporting goods retailer, gained 5.7p to 410.3p, but the rise was not enough to prevent its demotion to the FTSE 250.

Aberdeen Asset Management, up 5.8p to 247.2p, was also a casualty in the quarterly reshuffle, along with drugmaker Hikma Pharmaceuticals, down 66p to 1,815p, which was the unfortunate victim of Morrisons’ late surge.

On the wider market, UK stocks picked up where they left off in February as the FTSE 100 put on 55.79 points to 6,152.88.

Investors continued to chip away at tool hire firm Ashtead, whose plans to cut spending triggered an 81.5p dive to 842.5p. The group was cautious on the outlook for its Sunbelt division in the US, where it makes the bulk of sales.

Rotork stormed towards the top of the FTSE 250 leaderboard, 19.2p higher to 178.7p, as the under-pressure valve maker’s annual results provided no real shocks.

On AIM, first-half revenues at MySale, the online fashion retailer backed by Mike Ashley and Philip Green, grew just 4 per cent to A$128.2m, but the company trimmed pre-tax losses to A$500,000, lifting the shares 0.5p to 44.5p.