Amazon’s $13.7bn takeover of Whole Foods jitters the markets

Uncertainty over the impact of Amazon’s $13.7 billion takeover of Whole Foods on the food industry upset the markets on Friday, as the deal sent shockwaves through the food distribution market.

DUBLIN

It was a busy day on the Irish stock market, and there was a bit of a jump before close of business, which investment advice company IFG benefited from, finishing the day up 6.5 per cent.

Bank of Ireland saw strong volume throughout the day, but closed effectively flat. "It's people taking positions on the back of the AIB listing," said an analyst with Davy.

Grafton Group rebounded, up 2 per cent, along with the rest of the sector. Building materials company CRH shares traded in strong volumes, but finished flat.

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UDG Healthcare had a strong day, up 4 per cent on the day. It was up 7 per cent for the week. "We put an outperform note on the company earlier in the week and it performed strong all week on the back of that," said the analyst.

The Real Estate Investment Trusts (REITs) performed well also, with Hibernia the "standout performer", finishing the day up 4.5 per cent. Elsewhere, Smurfit was down 1.5 per cent; Glanbia was up 2 per cent for the day; while Greencore was up 1.5 per cent. "The key thing was the decent recovery off a weaker day on Thursday," added the analyst.

LONDON

Supermarket shares fell to the bottom of the FTSE 100 as news of Amazon's £10.7 billion takeover of Whole Foods sparked jitters over fresh competition in the grocery sector.

London's blue chip index ended the day up 0.6 per cent or 44.18 points at 7,463.54, but listed shares in Tesco closed down 8.85p at 171.1p lower, while J Sainsbury dropped 10.10p to 252.3p, and Marks & Spencer Group fell 6.6p to 345.2p.

Tesco shares had previously been on the rise after reporting its sixth consecutive quarter of positive sales, but were hit after Amazon announced it was acquiring Whole Foods.

Shares in Morrison Supermarkets – which has a standing deal to sell groceries through Amazon – rose 2.7p to 242.6p. In currency markets, the pound was mixed, rising nearly 0.2 per cent versus the US dollar to $1.277 but falling 0.1 per cent against the euro to €1.141.

NEW YORK

US stocks also fell after Amazon's announcement. Markets hit the shares of Walmart and grocers, while disappointing US economic data hurt the dollar and US Treasury yields.

The S&P 500 consumer staples index, down 1.6 per cent, was the biggest drag on the benchmark S&P 500 stock index. Bucking broader declines on news of the deal, Amazon shares surged 3 per cent while Whole Foods shot up 27.2 per cent.

The Dow Jones Industrial Average was down 2.73 points, or 0.01 per cent, to 21,357.17, the S&P 500 lost 3.94 points, or 0.16 per cent, to 2,428.52 and the Nasdaq Composite dropped 20.63 points, or 0.33 per cent, to 6,144.87.

The US dollar fell against a basket of key currencies; it was down 0.3 per cent after the day’s data, which raised concerns about spending.

US homebuilding fell for a third month in May to the lowest in eight months as construction activity declined broadly, while the University of Michigan said its barometer on US consumer sentiment unexpectedly fell in early June.

EUROPE

European stocks advanced for the first time in three days as a rally in food and beverage firms offset a plunge in retailers.

The Stoxx 600 fell 0.5 per cent for the week after retreating 0.4 on Thursday, led by retailers. However, it rose 0.7 per cent at the close, with all but two industry groups in the green.

Automakers rose 0.5 per cent after rallying as much as 1.3 per cent following the car sales data. A brightening economic outlook and political stability in France helped the sector get back on the recovery path.

Analysts expect European companies to report stronger profit growth than US peers for a third consecutive quarter, thanks to a recovery in the euro area after years of sluggish growth.

Greece’s creditors agreed to release €8.5 billion in new loans for the country, ending months of uncertainty over whether it could meet large bond payments due in July.

– (Additional reporting: Agencies)