When is a 6.3% like-for-like quarterly sales slump seen as good news? The answer seems to be when it occurs in the context of the dire 2014 performance of the UK’s listed supermarkets so far this year.

Morrisons shares shot up today by 6% to 172.2p (reaching as high as 177.6p in early trading) as the market breathed a huge sigh of relief that its third quarter figures weren’t worse. Despite the sales fall being towards the grimmer end of analysts’ expectations, it was an improvement on its 7.4% first half like-for-like sales decline and investors took comfort from improving trends for customer transactions and items per basket. 

Dalton Philips said he was “encouraged” by the figures, but others were harder to please. Calling Morrisons’ numbers “disappointing”, Bernstein analyst Bruno Monteyne argued: “The LFL decline was worse than market expectations. Worse still, we note the heavy vouchering activity early in the quarter and longer opening hours. Both measures will likely have a detrimental effect on margin.”

Nevertheless, Morrisons’ numbers helped sustain the M&S-driven grocery retail rally from yesterday, with Sainsbury’s up 6% to 262.2p and Tesco rising 3.3% to 181.5p. M&S also continued its strong run from yesterday, rising another 5.5% to 468.5p – its highest closing price since April.

Away from the supermarkets, investors gave a hearty thumbs up to Dairy Crest’s plan to sell off its milk business (see above). Dairy Crest ended the day 15% up at 490p, reversing its steady share price fall so far in 2014. Before today the firm was 21% down year-to-date, but is now just under 10% down from the beginning of 2014.

Tate & Lyle dipped 1.1% to 602.5p after it announced a 40% drop in first half pre-tax profit – though it opened as high as 624p before tailing off. The sweetener maker is 19.5% down since issuing its profit warning in late September. Coca Cola HBC was 1% up to 1,393p after reported flat profits on lower volumes in the third quarter.

John Menzies again was one of the market’s biggest fallers, dropping another 9.2% after its catastrophic share price fall yesterday following a profit warning. The stock has now lost 35% of its value in the past two days.

Economy News

The Bank of England’s MPC stuck true to form today by holding the base interest rate at 0.5% - precisely where it has stayed since March 2009.

It is now looking increasingly likely that the rate will remain at its historic low until after the 2015 general election given the global economic uncertainty, but next week’s quarterly inflation report will be carefully digested for any data that might persuade the MPC to act earlier.

Two MPC members (Martin Weale and Ian McCafferty) have pushed for a rate increase in recent months, but it is unlikely too many others will join them while CPI remains at 1.2% and pay growth remains weak.

Elsewhere, UK manufacturing rose at a faster rate than expected in September – with output growing by 0.4% month-on-month according to the Office of National Statistics. Overall industrial production also showed solid growth, rising by 0.6%.