Equities Update: Greggs, Tesco, M&S…

Equities return to cautious mode this week

Global equity indices have been trading with a more cautious tone this week, with a noticeable bearish bias in US markets. After a strong start to the year that pushed several benchmarks close to, or to, record highs, momentum has softened as investors reassess the near-term outlook. In the US, gains have become more selective, with broader indices struggling to extend rallies and price action increasingly characterised by consolidation and mild pullbacks rather than outright risk-on buying.

The cautious mood largely reflects uncertainty around the interest-rate outlook. Recent economic data have reinforced the view that growth remains resilient, complicating expectations for how quickly and how far the Federal Reserve can ease policy. As markets adjust to the possibility that rate cuts may be slower or more limited than previously priced, equity valuations—particularly in the US—have come under greater scrutiny. Elevated valuations, especially in large-cap growth stocks, have made indices more sensitive to even modest shifts in rates, yields and policy expectations.

Beyond monetary policy, investors are also navigating a familiar mix of macro and geopolitical risks. Ongoing geopolitical tensions, fiscal uncertainty and policy noise have encouraged more defensive positioning, while the absence of a clear near-term catalyst has reduced conviction to chase markets higher. As a result, trading has taken on a more two-way, risk-managed character, with investors favouring selective exposure and awaiting clearer signals from upcoming economic data before committing fresh capital.

S&P 500 daily chart

Past performance is not a reliable indicator of future results.

Greggs posts solid Christmas update after tough year

Adam Vettese, market analyst for eToro says: “Greggs’ Q4 trading update delivers a reassuring end to a challenging year, with total sales up 7.4% and like for like growth accelerating to 2.9% over the Christmas quarter from 1.5% previously. This is evidence that the brand’s value appeal and seasonal favourites are still resonating despite subdued consumer confidence.

“Full-year total sales rose 6.8% to £2.15 billion, with the group on track for in-line profits before a minor one-off tax hit, while outperforming the wider food on-the-go market and gaining share. The balance sheet shows peak investment with net cash at £47 million, but capex moderation in 2026 should restore cash generation amid lower input inflation.

“That said, growth remains well below historical peaks, and temporary supply chain pressures may squeeze margins short term, capping any significant price recovery. Shares have rebounded sharply from November lows, but this is off the back of a mammoth decline of 50%. Greggs trades on mid-teens multiples which is reasonable and investors may see value here and bet on a rebound, although this will be contingent on consumer confidence doing the same.”

Tesco Christmas update softer-than-expected amid cautious spending

Lale Akoner, global market analyst for eToro says: “Tesco posted a softer-than-expected Christmas trading update, signalling that growth is becoming harder to sustain in a more price-sensitive consumer environment. UK like-for-like sales missed market expectations, reflecting cautious household spending and intensifying competition from discounters, which triggered a sharp negative share price reaction.

Management remains confident in volumes and reiterated its cash flow outlook, supporting dividends and potential buybacks. However, the emphasis is increasingly on defending market share through sharper pricing rather than expanding margins. With food inflation proving sticky and competitive pressures rising, the scope for further earnings upgrades appears limited.

“For retail investors, the message is clear: Tesco remains financially resilient, but near-term upside is likely to depend more on execution and cost control than on accelerating sales growth.”

M&S finds comfort in food as challenges linger

Mark Crouch, market analyst for eToro says: “Marks & Spencer will be hoping the Christmas quarter provides a springboard into the new year, one the retailer desperately needs. The festive period delivered a respectable showing in food, with like-for-like sales up 5.6 per cent, but that’s where the Christmas cheer ended. Clothing, home and beauty slipped 2.9 per cent, a reminder that the aftertaste of last year’s cyber-attack still lingers.

“It’s perhaps unsurprising that food once again did the heavy lifting, underlining the strength of M&S’s core proposition. Yet investors are unlikely to be sweet-talked by groceries alone. The proof, as ever, is in the pudding, and M&S shares are down around 20 per cent since October, signalling doubts that last year’s fallout has been contained. 

“Having been on cloud nine earlier in the year, the cyber incident delivered a stiff dose of reality for M&S management and investors alike. In a fragile consumer environment, M&S cannot afford to let anymore momentum slip through its fingers. Christmas may have steadied the ship, but turning seasonal cheer into durable growth will now require flawless execution.”