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FTSE rallies 1% as tech rebounds, Macron wins big
Brexit fears set aside as US technology stocks rally and Europe lifted by French president Macron's electoral success.
Markets
A rebound in US technology stocks and optimism over French president Emmanuel Macron's stunning electoral success pushed markets higher.
J Sainsbury (SBRY) was among the initial fallers on both sides of the Atlantic after the news broke on Friday as investors worried about Jeff Bezos’ ecommerce giant upping its expansion into grocery deliveries.
Today the shares bounced back 2.2% or 5.6p to 258p on reports that Sainsbury had beaten rivals Co-op and Morrisons (MRW) in bidding for convenience chain Nisa.
Nisa, a mutual network with 1,400 members running 2,500 shops, recently hired advisers to help it respond to the threat of Tesco’s controversial takeover of wholesaler Booker. Swallowing Nisa would enable Sainsbury to match its rival’s bid to beef up its presence in corner shops, although it requires the support of three quarters of the group’s members to go ahead.
Sainsbury’s advance helped lift the FTSE 100 35 points or 0.5% to 7,498, although the top blue chip riser was G4S (GFS), up 4% to 334p, as the security firm continues its rally after returning to the index this month.
Meanwhile Ocado (OCDO) shot up 11% or 30p to 296.4p after analysts at Exane upgraded the online grocer to ‘outperform’. They reckoned Ocado stood a chance of becoming Amazon’s distribution partner as it sought to expand its home shopping business.
Its spike helped the 'mid cap' FTSE 250 index rise 56 points or 0.3% to 19,873.
Also buoying sentiment was shareholders sealing the merger between Standard Life (SL), up 2.4%, and Aberdeen Asset Management (ADN), up 5% to 294p.
Investment trusts dominated the top risers in the FTSE Small Cap, helping the index add 11 points to 5,625. JPMorgan Smaller Companies, Schroder Income Growth (SCF ) and Edinburgh Worldwide (EWI ) notched up gains of around 3.5%.
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3 comments so far. Why not have your say?
Michael Loveridge
Jun 19, 2017 at 18:17
This `Macron effect' will turn out to be a huge delusion.
A mere 42% of the electorate bothered to vote at all, and by definition those most likely to vote are those who are excited by a new political party.
But what it actually means is that the large majority of French people are apathetic, believing nothing will change, and this probably includes most of the people that Macron expects to be enthused by his labour reforms.
Neither he nor most of his MP's have any significant experience of government, and there is a huge gulf between theoretical reforms such as reducing the rights of the unions, and actually achieving them.
French unions are far more aggressive and effective than those in the UK, and they have brought far more experienced guys than Macron to their knees.
Likewise, the average member of the petit bourgeoisie is fairly reactionary and opposed to any more of his salary disappearing in tax, so Macron's got his work cut out there as well.
But what will really turn his dreams to dust is the French public sector. They are used to having comfortable, overpaid jobs and they will not just sit back and let him change things. They are experts in silent resistance, and will simply tie up any reforms they don't like in red tape .
I predict he'll be gone within 18 months, back to the private sector where his talents might actually work, and that French politics will then settle comfortably back into its old ways.
It's no coincidence that it was he French who invented the phrase, "Plus ça change, plus c'est la même chose."
report thisBruce J.
Jun 19, 2017 at 18:38
An interesting comment Michael, but if Macron fails where does France go next?
report thisan elder one
Jun 19, 2017 at 21:26
A good summary Michael!
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