Investors continued to ditch supermarket stocks amid fears that Tesco’s troubles will trigger a deepening of the price war in the beleaguered sector.
Morrisons was the biggest faller in the benchmark FTSE 100 Index, while Tesco boss Dave Lewis’ first day in the job was marked with a fall of 2 per cent following weekend reports that institutional investor Harris Associates had halved its stake in the group.
Independent retail analyst Nick Bubb said: “Friday’s Tesco profit warning and dividend cut came as a shock, but last week’s Kantar and Nielsen data showed that Tesco’s market share is being squeezed on all sides and its biggest structural challenge remains its over-exposure to the increasingly obsolete hypermarket format.”
Tesco shares, which fell to an 11-year low on Friday, were down a further 4.4p to 225.6p. Morrisons was off 4p at 173.5p, while Sainsbury’s was down 0.8p at 289.5p.
Overall, the FTSE 100 edged up 5.56 points at 6,825.31 at the start of an important week for monetary policy-makers in the UK and Europe. Germany’s Dax and the French Cac were both broadly unchanged, while in New York stock exchanges were closed for Labour Day.
Geopolitical tensions have weighed on world markets in recent weeks, but BAE Systems was on the up as Bank of America pointed out that the arms maker should be one of the beneficiaries of the declining security situation. BAE shares added 10.9p at 456p.
HSBC was under pressure after respected fund manager Neil Woodford sold his holding in the bank due to concerns about “fine inflation” as regulators continue their crackdown on past wrongdoings in the industry. The shares were 4.5p lower at 647.5p, while Royal Bank of Scotland was off 2.5p to 360.3p. Barclays dipped 0.4p to 224.1p after announcing a deal to sell the bulk of its operations in Spain to Caixa at a £500 million loss on the book value.
On the risers board, ITV was up by more than 3 per cent – 7.5p to 218.7p – on speculation that Liberty Global boss John Malone is preparing the ground for a possible takeover swoop, having recently bought a 6.4 per cent stake.