European markets fall after Alcoa earnings but Tesco delights

Joshua Raymond, Market Strategist at City Index commented: "Investors continued to take profits off the table today having seen Alcoa's earnings disappoint overnight and feared that this may become a trend in the new US earnings season.

We started to see investors cash in their profits yesterday afternoon as the European markets reached new 16 month highs and the earnings from Alcoa has meant that this has continued today.

The majority of the profit taking has taken place within the energy and mining sectors, both big risers yesterday after China's export data. Both sectors are down over 1% today and this is keeping European Indices from posting gains.

Vedanta and Fresnillo are both weaker today and these two stocks have taken the brunt of the profit taking we have seen in the markets so far.

Tesco delights

Tesco earnings however absolutely delighted today after posting much bigger sales forecasts than expected. The retailer posted a 4.9% rise in sales, well above the 2.9% widely expected by the market and the news is helping to paint the picture that Tesco is not longer lagging the retail market place and if its holiday sales momentum carries, they may have a better 2010 than their competitors.

Game profit warning

We have seen investors looking to offload shares in Game Group after the retailer cut its profit forecast after a poor Christmas sales season. The news paints quite a different picture to that of the wider retail marketplace with British Retail Sales rising 4.2% according to the British Retail Consortium and Tesco, Next and John Lewis all outperforming.

The problem here is that the Christmas period was likely to be a key sales period for them with video games usually a popular gift item. However, clearly the good news on the high street has not been extended to Game and the fear is that this might continue into 2010 with further cost pressures likely on the consumer."