Coronavirus: Supermarkets rebound but leisure stocks suffer
Supermarket stocks made gains this morning after being dragged down by a mass FTSE 100 sell off sparked by mounting coronavirus fears.
Sainsbury’s share price jumped 8.02 per cent to 188.97p, Tesco was up 10.46 per cent at 233.3p and Morrisons climbed 7.98 per cent to 178p.
Grocers are positioned well to ride out the coronavirus outbreak, as they sell essential items that consumers cannot avoid buying during an epidemic.
Investors looking to Italy as an example of what could happen in the UK have seen that supermarkets remained open while other retailers, restaurants, bars and leisure venues have been forced to close.
“Ultimately, they will still be able to do business, but other companies that rely on discretionary spend won’t,” Michael Hewson, analyst at CMC Markets, said.
“Everybody has to eat, everybody has to wash, it’s the day to day sort of stuff that you need to survive. As long as the supply chain holds up they should be able to ride this out.”
Markets.com analyst Neil Wilson said: “In a crisis lockdown situation we need to still do the weekly shop.
“We will splash more cash on basics, nicer treats and better wines as we are reducing spend on entertainment and travel, freeing up cash for freer spending on groceries.”
The Restaurant Group, which owns Frankie & Benny’s and Wagamama, fell 13.66 per cent, Cineworld dropped 15.61 per cent and Superdry fell 7.37 per cent, as nervous consumers stay home following the coronavirus outbreak.
Gambling companies have been hit hard by the outbreak as sporting events have been cancelled due to coronavirus. Flutter Entertainment, the owner of Betfair and Paddy Power, suffered a 2.33 per cent share price drop this morning.
Ladbrokes’ owner GVC Holdings was down 4.39 per cent and William Hill’s stock dropped 4.93 per cent.
Wilson added: “Their online operations mean they should be ok, the problem is the wipe out of the entire sporting calendar.
“Some of the biggest events are coming up and may be cancelled.”