Following HSBC analysts’ predictions that a supermarket price war was now looking less likely, Tesco’s shares rallied as the company’s increasing pace of recovery means it is well placed to deal with any price cuts from its competitors. HSBC put a ‘buy’ rating and a 260p target price on the stock, which rose 3.7 per cent to 205.9p. Additionally, Citigroup added Marks and Spencer (M&S) to its buy list, as the retailer’s shares rose 1.3 per cent to 331.3p. The bank argued that investors have not placed enough weight on M&S’s UK store transformation plan, which opens up opportunities to make deeper cost savings over the medium term. For instance, closing one of M&S’s three central London headquarters and reducing employee duplication could boost the company’s earnings by 25 per cent, according to Citi.
The wider market followed thanks to the global bond sell-off, which helped support financials while pushing down inflation-exposed stocks such as utilities. The FTSE 100 rose 0.3 per cent, with banks leading the risers, as a stronger dollar and steeper US yield curve boosted their net interest margins. Barclays rose 5.2 per cent whilst HSBC was up 2.4 per cent.