Sector movers: Supermarket shares up as resource companies struggle

Resource stocks posted further declines on Tuesday in wake of the slump in oil prices and ongoing concerns over lacklustre global demand for key commodities, but supermarkets dragged London indices back into positive territory.

The FTSE 100 ended 0.98% or 57.41 points higher at 5,929.24, while the FTSE 250 ended 0.18% or 29.59 points higher at 16,687.91. Oil markets faced up to another bearish session with Brent and WTI futures staying at 12-year lows and heading lower still, as oversupply concerns continued to dominate market chatter.

At 1705 GMT, Brent was down 2.22% or 70 cents at $30.85 per barrel, while WTI was down 2.83% or 89 cents at $30.52 per barrel, heading towards another record intra-session decline in wake of the supply glut and continuing worries over lacklustre demand.

Away from the oil markets, base metal futures also fell across the London Metal Exchange board following further declines in Asia. Three-month delivery contracts of copper (down 0.4%), nickel (down 1.9%), zinc (down 0.9%) and tin (down 3.7%) extended the previous session’s losses in late afternoon trading. However, primary aluminium (up 0.6%) and lead (up 0.5%) futures posted nominal upticks.

Meanwhile, precious metals continued to slip lower. COMEX gold futures contract for February delivery fell 0.88% or $9.70 to $1,086.50 an ounce, while spot gold in Dubai was 0.74% or $8.09 lower at $1,086.11 an ounce.

Spot platinum was also down 0.61% or $5.11 at $839.44 an ounce, while COMEX silver fell to $13.77 an ounce, down 0.73% or ten cents. Unsurprisingly, Randgold Resources (down 3.75%), Antofagasta (down 3.51%), BHP Billiton (down 2.86%) and Rio Tinto (down 2.65%) were among the biggest fallers on the FTSE 100.

Tullow Oil (down 7.23%), along with Acacia Mining (down 5.87%), Ophir Energy (down 4.74%), Cairn Energy (down 4.68%) and Norstrum Oil & Gas (down 4.38%) were on the FTSE 250 fallers roster.

However, the market went into positive territory led by supermarkets after Morrisons reported an unexpected increase in sales over Christmas.

Shares in Morrisons gained after the grocer delivered like-for-like (LFL) sales growth of 0.2% in the nine weeks to 3 January, well ahead of the 2% decline predicted by analysts. Revenues over the Christmas period were helped by LFL transaction numbers in core supermarkets up 1.3% on the same period last year and online grocery sales up almost 100%.

Tesco, J Sainsbury, Marks & Spencer and Ocado Group also advanced following the update.

Investors seemed to shrug off figures from Kantar Worldpanel showing sales in the British grocery market fell 0.2% in the 12 weeks to 3 January, due to the ongoing supermarket price war amid fierce competition. Sainsbury’s was the best performer with sales up 0.8% during the period while Tesco, Asda, and Morrison’s saw sales declines of 2.7%, 3.5% and 2.6%, respectively.

Elsewhere, Debenhams rallied after saying like-for-like sales were up 1.9% in the 19 weeks to 9 January, comfortably beating expectations for a 0.1% drop and better than last year’s 0.8% decline.