Tesco share price surged by more than 2 per cent today, outperforming the FTSE 100 which rose by almost a per centage point. The shares are trading at £227, which is slightly higher than last week’s low of £221.
Why Tesco stock price is rising
As I wrote last week, Tesco stock has been struggling because of the risks associated with Brexit and the higher costs associated with the retail sector. Also, investors have been wary about the impacts of the current coronavirus pandemic. While the company’s sales rose in the first quarter, they are worried about the eventual slowdown as people reduce their shopping.
The main reason why Tesco shares are rising today is because of a new report by Nielsen. The report said that online grocery sales rose by 13% in the past four weeks. That was higher by 7 per cent from a year earlier and 10% earlier from April. The report also showed that more British households have embraced online grocery shopping. More than 7.9 million of them bought their groceries online during this time. Sales rose by 103% on year on year basis and 6.6% in stores. That was the fastest growth in retail sales in more than 25%.
Tesco was the biggest winner in this trend. According to Nielsen, Tesco online sales rose by 11.7%. It was followed by Sainsbury, whose sales rose by 11%, Asda and Morrisons online sales rose by 5.7% and 9.4% respectively.
The biggest question is whether this trend will continue as the UK starts to open up its economy.
Most retailers around the world are embracing technology as more people transition to online shopping. In the United States, companies like Walmart and Target have invested billions of dollars in e-commerce platforms.
Sainsbury’s and Morrisons share price rose by 1.89% and 1.28%.
Tesco share price is trading at £227. On the daily chart, the price is between the 38.2% and 50% Fibonacci retracement level. It is also below the 100-day and 50-day exponential moving average. Therefore, I expect the bulls to attempt to recover the losses suffered last week. This will see them attempt to test the 50-day and 100-day exponential moving average at about $235.
On the flip side, a move below last week’s low will invalidate this prediction. That is because it will show that there are more bears in the market, who will be willing to push it below $220.