TESCO’S massive loss dragged the FTSE 100 down yesterday. It was also hampered by heavy declines in banking stocks.
Shares in Tesco closed down 5.2 per cent, at the bottom of the FTSE 100, after the UK’s biggest retailer plunged to an annual loss of £6.4bn and failed to provide details about the planned disposal of assets such as its data-gathering arm Dunnhumby.
“Tesco’s review of Dunnhumby is ‘well-advanced’, but there is no concrete news on its future or indeed the future of any of Tesco’s other operating assets,” analysts at Barclays said in a note.
The stock was still sitting on an 18 per cent gain since the start of 2015, but it was 35 per cent lower than at the start of 2014 as the retailer has been beset by financial and management issues in the past year.
The blue-chip FTSE 100 index closed 0.5 per cent lower at 7,028.24 points. The index had been treading water since hitting a record high of 7,119.35 points last week.
Investors were monitoring a standoff between Greece’s government and its creditors over reforms needed to unlock bailout funds amid renewed worries that Greece might have to leave the Eurozone.
“The FTSE 100 is very range-bound at the moment and lacks a clear direction,” IG analyst Chris Beauchamp said.
Commercial banks knocked 8.7 points off the FTSE, with Standard Chartered dropping 1.5 per cent after both Citi and Credit Suisse cut their target prices for the stock.
Rolls-Royce Holdings, the world’s second-largest maker of aero engines, rose 4.1 per cent after announcing that chief executive John Rishton would retire in July, and be succeeded by Warren East, the former head of Britain’s biggest listed technology company ARM.
Travis Perkins rose 2.7 per cent after the UK’s biggest supplier of building materials posted a 5.1 per cent rise in first-quarter like-for-like sales.
Gambling technology company Playtech rose 3.4 per cent after Goodbody Securities upgraded the stock, citing the proposed acquisition of TradeFX as a positive.
In Europe, the German DAX remained near record highs and the FTSEurofirst 300 is near its highest level in more than 14 years.
“Flows are starting to wobble a bit but this is more of a pause for breath in the middle of earnings season,” said Francois Chaulet of Montsegur Finance.