FTSE Falls as Supermarkets Under perform

Tesco’s surprise profit warning has sent supermarket shares tumbling and left the market nursing hefty losses once more.

But there are a couple of bright spots, notably outsourcing group G4S. The company has climbed 7.2p or nearly 3% to 281.2p after Credit Suisse analysts moved their recommendation from neutral to outperform and raised their target price from 245p to 320p. In a hefty note on the business services sector the bank said on G4S:

We think there is significant opportunity within the business to reduce cost and improve efficiency. GFS is, we think, a combination of an attractive multiyear self-help story plus a stock for which organic growth should accelerate into 2015. Our earnings per share estimates rise 7%-11% for 2015- 2016. Our 2015 forecasts are 3% above consensus.

But Capita has slipped 10p to £10.47 as the bank kept its neutral rating but cut its price target from £12.15 to £12.

Overall the FTSE 100 has fallen 71.08 points or more than 1% to 6601.07, with the prospect of a Santa rally seeming fairly distant. The index is on course for its lowest finish for a month.

Worries about the global economy, following Monday’s disappointing data from China and Japan and growing concerns about the eurozone – with Greece calling snap presidential elections after failing to exit its bailout programme – continue to unsettle investors. A drop in the Chinese currency on talk the country’s central bank will take more measures to stimulate the economy has also led to further volatility, while the recent drop in the oil price puts commodity companies under pressure .

via The Guardian

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza