THE TIPSTER
SAINSBURY is due to report its quarterly figures this week. The share price of the supermarket has had a torrid start to the month. Despite the fall in share price, expectations for the results are good, due to the hot bank holidays and the royal wedding. Interestingly enough, it is now also the seventh largest clothing retailer by volume in the UK. UBS has just put a buy target on it at 440p. Capital Spreads quotes Sainsbury at 372.2p- 327.7p.
There may have been some surprise from the news of a fall in copper imports into China at the end of last week, but with demand likely to remain robust, the prospect of a sharp drop in prices seems unlikely. Clearly, the Chinese government is trying to rein in inflation, and further tightening measures are to be expected. However, there still seems to be a wealth of demand in the pipeline. Current IG Index price on High Grade Copper (July ‘11) is $4.0805-$4.0845.
Carphone Warehouse updates the market tomorrow and all eyes will be on news of its 50 per cent venture with Best Buy. Plans were to open up to 100 Best Buy stores in the UK, but that may have changed, given weak trading statements by Dixons and Kesa. The shares are capped at 400p at the moment and that might be a good level to sell short with a tight stop loss. Spread Co offers 385.7p-388.3p.
After last Thursday’s shocker from Home Retail’s Argos division, UK retailers in general have been left struggling to convince traders that there are many reasons to buy, with the likes of Kingfisher and M&S at the bottom of the FTSE leaderboard last Friday. The big risk is likely to be a raft of broker downgrades for the sector as a whole, assuming the basic consumer demand simply isn’t there. As such, this week’s inflation readings may bring some confidence back to the high street, if this furthers the belief that interest rates will be held until the year end. However, this also serves to underline the fragile state of the recovery. Current IG Index price on the General Retail sector is 1,690-1,693.