Supermarkets rise and scorching temperatures: the markets in July

Supermarkets rise, hot weather remains and energy demand falls as we look at what happened in the markets in July.

Article updated: 30 July 2018 12:00pm Author: Graham Spooner

Stock markets in July trended higher with the FTSE 100 rising by around 2%. An easing in trade war tensions helped, but as always the US president continues to send out mixed signals, with his speeches and tweets ranging from taking a hard line to a somewhat softer approach. At the time of writing Europe concerns have eased, while China’s remain. As ever Brexit was never far from the news, but for July the effect was more on sterling than equity markets.

Companies where take-over rumours have circulated include; Smiths Group, Costain, ITV, GB Group, Spectris, along with thoughts that Anglo American may be broken up or merge with another mining group. Activist investors continue to put pressure on certain company management, with Hammerson the latest to be expected to react in some way to an activist’s presence on the shareholder register.

One story that has been rumbling on for some time is the pressure on the UK high street and retailers in general. Monthly stats issued by Kantar for supermarkets highlighted that the weather had helped sales recently. This is highly unusual in that the market has long become accustomed to retailers blaming the weather for poor sales. Apparently the run of hot conditions led to us all buying more drinks and food for the barbecue. A further boost came in the form of the England football team performance in the World Cup, coupled with other sporting events such as Wimbledon, which had us all glued to the television with a drink in one hand and a burger in the other.

Although the German football team did not cover themselves in glory, their businesses, in the form of Aldi and Lidl continue to chip away at the market share of Tesco and Sainsbury. The two combined now have a 12.9% share of the UK market.

The weather also impacted on SSE who came out with a warning that energy demand had fallen, leading to a drop in operating profit of around £80 million. There is every chance that a number of other companies in the latter part of summer will highlight the short-term effect on performance of the sun shining for such a long period.

As we move towards the final month of summer and the main holiday period, markets may slumber and volumes decline. Let’s hope a superb period of sport can be finished with a classic England – India series, before we all come back refreshed to concentrate once more on financial matters.


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Graham Spooner

Investment Research Analyst

Graham started out as a fully authorised dealer on the Stock Exchange trading floor and for various banks, before becoming an FSA-approved investment adviser. Now a respected voice in the media, Graham’s share tips and comments on the markets are frequently sought by the national press.