London View

A black day, week, month and year for the UK's Biggest Supermarkets

It’s proving to be another tough week for some of the UK’s biggest supermarket chains:

Tesco -  The Financial Conduct Authority has initiated a full investigation of Tesco after last week’s revelation that the company overstated profits to the tune of £250 million. Tesco has promised to co-operate fully with the FCA, but that didn’t stop the company’s share price from falling further this morning; Tesco stock is currently down by around 2.6%.

Sainsbury’s - Rival supermarket chain Sainsbury’s was doing even worse than Tesco after reporting a 2.8% drop in Q2 sales (ex fuel) – Sainsbury’s stock is currently down by around 4%.

Morrisons – Finally, WM Morrison is currently trading down by 4.34% after the news that its former group treasurer and Head of Tax has been charged by the FCA with insider trading related to Ocado stock. Ocado shares spiked last year after a deal to provide Morrison’s online shopping service.

This means that three of the UK’s ‘Big Four’ supermarket chains are currently trading significantly lower (the fourth, Asda, is owned by Walmart and is not a separately traded entity in the UK). With low-cost retailers such as Aldi and Lidl continuing to make gains at the expense of larger firms, 2014 is beginning to look like an Annus Horribilis for the UK’s biggest supermarket chains.

Meanwhile, protests are picking up steam in Hong Kong at the start of a week-long national holiday, with tens of thousands of citizens calling for a free and fair Chief Executive election. That election is not meant to take place until 2017, but a growing number of people are also calling for the immediate resignation of the current Chief Executive of Hong Kong  C.Y Leung. The Hang Seng closed down by a further 1.28% this morning; the Index is due to re-open in the middle of next week.

Over in the US the big news yesterday was eBay’s announcement of plans to spin off its lucrative PayPal business. eBay shares closed up by 7.54% yesterday after the e-commerce company’s surprise move; the firm had previously resisted pressure from key investor Carl Icahn to separate Paypal and eBay. eBay is currently down by around 1.5% in pre-market trading.