Supermarkets are not a Brexit basket case, says bullish analyst

SUPERMARKETS shone on the FTSE 100 yesterday, leading the index higher after an upbeat note said the sector offered “compelling value” despite worries over its Brexit exposure.

Ian Gordon, an analyst at Investec, took a bullish stance on food retailers, which have suffered lately amid concerns over potential disruptions to their supply chains after the UK’S departure from the EU.

Mr Gordon said: “Having reviewed the possible impact of Brexit-driven changes in consumer spending patterns, tariffs and supply chain disruption, we believe the weakness in the supermarket sector is unwarranted.”

He added: “While there is currently undoubted nervousness on companies with large UK exposure, we still feel the sector offers compelling value.”

Investec bank upgraded its rating on Morrisons to buy, from hold, and kept “buy” ratings on Tesco and

Sainsbury’s – marking it as bullish across the whole food retail sub-group. It stayed more downbeat on

Ocado, however, keeping its stock at a sell.

Mr Gordon said potential tariffs post-brexit would “have little impact on shopping costs”, and said any disruption from supply shortages would be “temporary in nature”.

Tesco, which Investec said was “positioned for sustainable profit growth”, was the biggest climber of the three listed supermarket giants, closing 5.1p up at 218.8p. Morrisons ended the day 2p up at 184.2p, while Sainsbury’s added 1p to 197.25p. Online rival Ocado fell 8p to £12.28.

The pound fell more than 1pc after Boris Johnson’s plans to prorogue Parliament emerged. After a steady comeback, however, it was down less than 0.5pc against the dollar and the euro when the London market closed – far from a disastrous day in the context of recent gains.

The FTSE 100’s performance seemed unhinged from that of sterling: despite spending much of the day in the doldrums, it made a comeback in line with the pound during the afternoon.

The blue-chip index, which closed the session up 0.35pc, or 25.1 points, at 7,114.7, was boosted by London’s two listed energy giants: BP and Royal Dutch

Shell. BP provided the most upwards pull, rising 10.7p to 498.7p after announcing plans to sell its Alaskan operations. That performance singlehandedly added 8.5 points to the FTSE 100’s gains, with Shell contributing almost 11 points more across its two listed share prices.

Greggs led the FTSE 250 risers, puffed up 88p to £20.54 after a positive note, although the Uk-focused index had a bad day, falling 0.7pc. The worst performers were Amigo Holdings and Provident Financial, down 8.4pc and 8pc respectively.