Supermarket shares rally after vote of confidence

THE prospect of a No Deal Brexit has usually spelled bad news for shares in Britain’s biggest grocers.

But the supermarkets swept higher after a cheery analysis concluded they could flourish even if the UK doesn’t strike an agreement with the EU. Traders piled into Tesco, Sainsbury’s and Morrisons as Investec analysts declared the sector ‘offers compelling value’ and argued the widely held concerns, such as the impact of trade tariffs, have been overblown.

Glass- half- full analysts said: ‘Having reviewed the possible impact of Brexit-driven changes in consumer spending patterns, tariffs and supply chain disruption, we believe that the current weakness in the supermarket sector is unwarranted.’

Keeping ‘buy’ ratings on Tesco and Sainsbury’s, Investec bumped Morrisons up from ‘hold’ to ‘buy’.

But the otherwise optimistic brokers remain unconvinced about Ocado, which they think has oversold investors with its shiny, hightech robotics division, and kept a ‘sell’ rating on its stock.

Investec’s review sent Tesco shares up 2.4pc, or 5.1p, to 218.8p, shares in Sainsbury’s up 0.5pc, or 1p, to 197.25p, and Morrisons 1.1pc higher, up 2p, to 184.2p.

Languishing on Investec’s naughty step, Ocado slid 0.7pc, or 8p, to 1228p.

An upgrade from brokers at UBS also boosted baker Greggs.

Analysts at the Swiss investment bank put a ‘buy’ rating on its stock, up from a previous rating of ‘neutral’, and bumped up the target price of its stock from 1880p to 2300p.

They also said the chain, which has around 2,000 stores, could roll out another 500 or, at a stretch, 1,000 without serious problems.

The vote of confidence in its stores came a few days after it announced it is working on vegan versions of all its best- selling foods after the marketing coup that its vegan sausage roll pulled off in January. Greggs rallied 4.5pc, or 88p, to 2054p.

BP was up 2.2pc, or 10.7p, to 498.75p, following an announcement after the market closed on Tuesday of the sale of its operations in Alaska in a £4.5bn deal with oil group Hilco.

Petrofac shares rose 1.1pc, or 4.3p, to 410.3p despite warning that its revenues are likely to fall next year. It is struggling to win contracts in Saudi Arabia and Iraq after a former executive was convicted of bribery in a Serious Fraud Office probe.

Revenues rose 1.3pc to £2.3bn in the first six months of this year. Energy services specialist Wood

Group fell 6.5pc, or 25.2p, to 364.9p, after analysts at RBC gave its target price a haircut, arguing its stock is worth 600p a pop rather than 670p. The FTSE 100 ended 0.35pc higher, up 25.13 points, to 7114.71, while the mid-cap FTSE 250 fell 0.69pc, or 132.89 points, to 19,202.99. South Africa- focused miner

Petra Diamonds sunk after the industry leader, De Beers, reported a 44pc slump in sales at its most recent auction. Shares in Petra closed down 6.6pc, or 0.57p, to 8.06p, while Anglo American, which owns De Beers, finished 1.6pc higher, up 27.2p, at 1717.6p. Another African miner, Rainbow

Rare Earths, fell 9.2pc, or 0.3p, to 2.95p, after a double-whammy of bad news.

Production at a mine in Burundi was disrupted by heavy rain, and the chief executive who took the company to market has quit.

Martin Eales had held the post since 2014 and will be replaced by George Bennett, who previously headed Shanta Gold.

And, far from bulking up ahead of a financial release, The Gym

Group tracked 2.1pc lower, down 5p, to 238.5p, before reporting half-year results today.