CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Tesco shares may shrug off massive full year loss

Article By: ,  Financial Analyst
April 20, 2015 9:03 AM

Updated 0838 BST

Tesco could cap off the worst financial year in its history on Wednesday by unveiling a loss of as much as £5bn, according to news reports.

If so, Britain’s largest supermarket chain would deliver what The City hopes will be its last negative surprise for some time.

Whilst large investors already foresaw a weak full-year outcome, consensus forecasts suggest Tesco’s net income could still be £790m in the black.

However, including a long-anticipated write down on the value of some stores bought during times of highly inflated property prices, now widely estimated to be at least £3bn, the final result could be much worse.

Tesco warned some time ago that trading profit for the year that ended in February would be no more than £1.4bn versus £3.3bn in the year before.

A result that’s billions of pounds in the red would therefore still be something of an unpleasant surprise compared to expectations.

But it’s one which the market had at least already factored in as a risk months ago.

 

Tesco’s disclosures over the past year have indeed been shocking.

However, it looks like the worst of its troubles have now been publicized, and there would seem to be little justification for the shares to pierce recent support circa 232p

Traders of Tesco Daily Funded Trade are still likely to be cautious about pushing the title back above a recent sticking point at 236.56, in reaction to the news reports on Friday.

But there are signs that the sting from the Friday’s news might only be a relatively blunt one now, with the shares still more than 20% below their value from about a year ago, even after gaining about 60% since December.

The Tesco trade within City Index was already looking oversold on a short-term basis.

The title can be expected to rise early on, although no formal signal has been issued from the trading signals attached to the chart since a ‘go long’ was triggered by the Slow Stochastic Oscillator on Friday.

That one remains in effect.

In fact, the next signal from the stochastic-based system might be a ‘sell’, judging by the steep ascent of its moving average (MA) lines.

The other sub-chart above showed a MACD-based trading system.

The MA lines on this one were also pointing upward.

But their depth within negative territory (indicating a selling bias) showed the long trade was far from overcrowded around an hour and 40 minutes into the session.

 

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024