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Tesco
“Tesco must be frustrated at the fact it has pulled out all the stops to serve the nation during the pandemic, yet earnings have gone into reverse,” says Russ Mould, Investment Director at AJ Bell.
“Falling profit reflects the significant extra costs it has had to stomach to keep shelves stocked, staff and customers safe in-store, and additional capacity to service ferocious online demand.
“There hasn’t been a bigger live stress as that experienced by supermarkets over the past 13 months and Tesco and others will have learned valuable lessons in how to operate under intense pressure.
“That should provide benefits in the longer term, but for now Tesco shareholders will have to make the most of the small bone they’ve been thrown. The supermarket’s decision not to cut the dividend despite falling profits is a small token of its thanks, but some investors will no doubt still feel disappointed.”
Markets
“Burberry was back in fashion as investors flocked to the luxury goods sector following LVMH’s very strong update yesterday. The latter’s first quarter sales were ahead of expectations, fuelling investor optimism that other names such as Burberry could also be in the same sweet spot.
“A lot of people will have saved cash during the pandemic and there is an expectation for a big spending spree as countries ease lockdown restrictions.
“The energy and mining sectors were also in demand on Wednesday, though not enough to lift the FTSE 100 which traded flat at 6,894. Supermarkets and banks had a bad day, acting as a drag on the index.
“In the US, investors eagerly awaited today’s stock market debut of bitcoin exchange Coinbase. Cryptocurrencies have taken off in the past few years and investor appetite grows stronger for different ways to play the game. Coinbase’s share price performance is likely to be as volatile as cryptos themselves.”
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