We had a taste of the posh end of the grocery trade last week with results from Marks & Spencer and Waitrose, but things go mainstream this week with Tesco, Sainsbury’s and Morrisons all reporting on Christmas trading.
The trio have been battling for customers with each other, Walmart-owned Asda and German value chains Aldi and Lidl. Morrisons, which reports on Tuesday, may have the best chance to spring a nice surprise because expectations are so low. Sainsbury’s has been the best performer of the big grocers, but boss Mike Coupe is considering taking a punt on a bid for Argos’s owner, Home Retail Group. Sainsbury’s revealed its interest last week and this will add spice to its update on Wednesday. At Tesco, the sector’s lumbering giant, investors will look on Thursday to see if signs of revival under newish broom Dave Lewis lasted through Christmas.
Asda, which suffered badly at the hands of the discounters last year, puts its figures out in February but the Kantar and Nielsen market share surveys will give a good idea of its performance, as well as how Aldi and Lidl fared. Away from the grocers, there will be updates from JD Sports, Greggs, Debenhams, Mothercare, Home Retail, Dunelm, Game Digital, Boohoo.com, AO.com and others.
As veteran analyst Nick Bubb rounded off his preview note: “Phew!”
Sharper relief at last?
In October, Mark Carney, governor of the Bank of England, reaffirmed his view that the decision to increase interest rates “comes into sharper relief around the turn of the year”. Well, here we are: but hardly anyone expects the Bank’s rate-setters to increase borrowing costs on Thursday. Market forecasts expect the vote to remain at 8-1 with Ian McCafferty, the former CBI economist, still the lone hawk. Markets increasingly think the first rate rise will be in the second half of this year or even in 2017.
Outside events have made a rate rise less likely, with share prices tumbling and concern about global growth caused by bad news from the Chinese economy and stock market. But domestic economic news has also got worse since Carney teed markets up for a rise: wage growth has slowed, and surveys have shown manufacturing exports stagnating and Britain’s dominant services sector weakening.
Neil Woodford, perhaps the UK’s most closely followed investor, has said that a rate rise this year would be “ludicrous” because the economy could not stand it. With the economy once again propped up by consumer spending, and buy-to-let purchases booming, things could be all the more painful when rates eventually do rise.
New year, new trials
On Monday, a group of the City’s former top traders will appear in court accused of manipulating the euro interbank offered rate. The 10 traders from Deutsche Bank and Barclays will be the largest group of defendants to face trial accused of fixing rates: a trial of six former employees of City interbank brokers is currently drawing to a conclusion in London.
The big names involved in the new trial include Christian Bittar, formerly of Deutsche Bank, and Philippe Moryoussef, who worked at Barclays. Both men vigorously deny the charges. Bittar was one of Deutsche Bank’s most profitable traders before he was fired in 2011.
The trial will be the first time Barclays traders have faced charges over interest rate manipulation. Bob Diamond left as the bank’s chief executive in the wake of the matter in 2012 and it cost Barclays £290m in fines. Moryoussef worked at Barclays between 2005 and 2007 before joining other banks including RBS and Nomura.
Tom Hayes, a former UBS and Citi trader also involved in the scandal, is serving 11 years after being found guilty in August. His letters describing prison life, including being strip-searched and witnessing fights and overdoses, will have made grim reading for those facing similar allegations.
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