Interactive Investor

Must read: bitcoin, Tesco, Taylor Wimpey

Our head of investment rounds up the morning's big news.

11th January 2024 08:36

Victoria Scholar from interactive investor

      BITCOIN 

      In a hotly anticipated decision, US regulators have approved exchange-traded funds (ETFs) that invest in bitcoin, in a major win for the crypto complex. The approval provides a significant stamp of legitimacy for bitcoin. It will help boost trading access and volumes for bitcoin and the decision will help to expand its penetration as a result. 

      Bitcoin is little changed today, but it is up 50% over the last six months, so it’s a case of ‘travel and arrive’ in trader speak, or ‘buy the rumour, sell the fact’ where a lot of the gains are already priced in ahead of the decision, reflecting the market’s expectation that regulators would give the green light. If the regulators had voted the other way, we might have seen a major slump in the cryptocurrency.

      Bitcoin remains a highly speculative and volatile asset that can come with significant gains but can also land traders will painful losses.

      TESCO 

      Tesco (LSE:TSCO) has raised its earnings outlook for the second time in recent months. Full-year retail adjusted operating profit is expected to come in at £2.75 billion, up from its previous guidance for £2.6-2.7 billion and an increase versus last year’s figure of £2.49 billion. Meanwhile, the UK’s largest supermarket and retailer reported like-for-like sales during the six weeks over Christmas up 6.8%. But they slowed to 7.9% in the third quarter, down from 8.4% in Q2. Tesco said this was its ‘best Christmas yet.’ 

      Tesco’s Clubcard sales penetration and its low-price guarantee helped to drive sales despite pressures from the cost-of-living crisis. Its Aldi Price Match scheme and continued price cuts mean that customers know they are getting the cheapest prices at Tesco, helping continue to attract shoppers to its stores. Tesco’s finest range also helped to drive sales over the festive season with a record Christmas sales week. On inflation, Tesco said it is inflating less than all key competitors, claiming to be the cheapest full-line grocer for over 14 months. 

      Shares in Tesco are up today and have gained more than 20% over the past 12 months.

      TAYLOR WIMPEY 

      Taylor Wimpey (LSE:TW.) said it expects full-year group operating profit to come in at the top end of its guidance range. Market conditions are improving with the disinflationary trajectory for construction costs coupled, with a decline in mortgage rates and an improvement in affordability. 

      However, 2023 total group completions hit 10,848, down from 14,154 in 2022, and the housebuilder warned that ‘the market remains uncertain’ and the planning backdrop is ‘extremely challenging.’ The macroeconomic environment with the risk of a UK recession and elevated interest rates will continue to pose headwinds for Taylor Wimpey this year.  

      Shares have been on the rise since October last year, reflecting hopes that the Bank of England is done with hiking rates, inflation is on the way down, and monetary policy will loosen in 2024, driving a pick-up in housing market activity this year.

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