Markets: Investors get renewed taste for risk

SUPERMARKET chains Morrisons and Sainsbury’s were among the few blue-chip stocks to miss out on yesterday’s market rally amid speculation that they had fared badly in the battle for Christmas trade.

They were among a handful of defensive stocks ditched by traders as they scrambled for riskier assets following the deal to avoid the US “fiscal cliff”.

Caroline Gulliver, analyst at Espirito Santo Investment Bank, issued a “sell” note for Morrisons, which was down 2.1 per cent at 257.4p. She said: “It is commonly believed that UK food retail is a zero sum game, but at least it has been a battle for market share in a low growth environment as the top four retailers have gained share from independents and non-food retailers.

“Now, consumer behaviour is changing with growth coming from online, discount and convenience stores.

“This is increasing the cost of doing business and the environment has changed to one of negative earnings growth – even with a gently improving consumer backdrop.”

Retail analysts at Oriel Securities said employee-owned Waitrose and no-frills German operators Aldi and Lidl appeared to have come off best in the key Christmas period, while Sainsbury’s seemed to have suffered the worst slowdown. Its shares were down 2.6 per cent at 336p.

The FTSE 100 was up 129.6 points or 2.2 per cent to reach an 18-month high of 6,027.4, as relief over the deal in Washington combined with a better-than-expected survey on the UK manufacturing sector.

Miners were the biggest risers, with Evraz up more than 7 per cent at 18.7p to 277.6p. Glencore International added 25.2p to 376.5p, Xstrata was 70.5p higher at 1,129.5p and Eurasian Natural Resources was up 18.6p at 302.6p.

NEW YORK: US stocks kicked off the new year with their best day in more than a year, sparked by relief over a deal in Washington to avert the “fiscal cliff” of tax hikes and spending cuts that threatened to derail.

The Dow Jones industrial average gained 308.41 points, or 2.35 per cent, to end at 13,412.71. The Standard & Poor’s 500 index jumped 36.23 points to 1,462.42. The Nasdaq Composite index rose 92.75 point at 3,112.26.