View the article online at http://citywire.co.uk/money/article/a648660
Week Ahead: Tesco a festive winner as UK economy stumbles
Our preview of the main financial events of the coming week.
Beyond Britain’s shores, things are looking better.
US politicians may have skirted their way around the edge of the fiscal cliff rather than falling off the edge – reaching a deal to avert sweeping tax rises, but delaying a decision on spending cuts – but that’s still one less global economic concern.
In China, the most important of the emerging markets, the economy appears to have turned. The days of 10% annual growth, though, are gone.
And the continued existence of the 17-member eurozone is no longer being threatened on a daily basis, though concerns over the currency bloc’s fate and weak demand for British exports will remain an impediment to growth.
In the UK, though, we remain on ‘triple-dip’ watch. In the coming week some strong economic reports will be needed to prove the UK remains on course for growth after a feeble report on the dominant services sector hit economists’ desks with a thud on Friday.
A string of data due over the coming week on major companies and the wider economy will reveal whether the nation’s finances improved in the last part of the year.
Listed supermarkets Tesco (TSCO.L), Sainsbury (SBRY.L) and Morrisons (MRW.L) will reveal their Christmas trading to investors. Analysts expect Tesco to be the ‘winner’, thanks partly to a flattering comparison with weak previous trading from the supermarket, which has been struggling to hold onto market share.
‘Although we continue to expect volatility, we believe Tesco’s trading update will offer further evidence of the growing traction of the initiatives in its grocery offer,’ wrote Nick Coulter of Nomura in a note.
While agreeing on Tesco’s outperformance, Investec’s Dave McCarthy warned that overall ‘Christmas started slowly and never got going. Stores were quiet and consumers were cautious.’
A broader gauge of Christmas spending will come from the British Retail Consortium, which publishes its December sales monitor on Monday night. Howard Archer, an economist at IHS Global Insight, suggested that while there could have been a last-minute rush for Christmas presents, festive sales are unlikely to have been better than ‘adequate’.
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Andrew Friend, acting co-manager*, and Marcus Langlands Pearse, co-manager of the Henderson UK Property Unit Trust (HUKPUT), provide an overview of the key risks and opportunities for the UK commercial property market.
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Look up the shares
- Tesco PLC (TSCO.L)
- J Sainsbury PLC (SBRY.L)
- WM Morrison Supermarkets P L C (MRW.L)
- Next PLC (NXT.L)
- Debenhams PLC (DEB.L)
- Marks and Spencer Group PLC (MKS.L)
More from us
- Fiscal cliff Q&A: what does it mean for investors?
- Friday Five: how the euro crisis could be re-ignited
- Bank of England unmoved by ‘triple dip’ threat
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