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March 1, 2016

Pegler’s market report – 01.03.16


in Insights Press Releases

Pegler's Market ReportAs published in the Brighton Argus (01.03.16) Business on page 21 under the title Pegler’s Market Report:

Key market drivers

Global stock markets continue to be driven up and down by the main key themes for 2016:

  • US recovery and interest rate direction
  • China – hard/soft landing, knock on effect to commodities
  • Banks – impact of further possible negative interest rate policy
  • Commodities – oil supply/demand balance and falling commodity prices
  • Brexit fears worries for Eurozone growth and sterling depreciation

While the Brexit debate continues, sterling is coming under increasing pressure, which should benefit exporters and currency traders in the short term. The pound crashed to its lowest level against the US Dollar in seven years after Boris Johnson announced he will campaign to take Britain out of the EU.

The London Stock Exchange’s decision to merge with the Deutsche Boerse, just before Britain potentially votes to exit Europe in which Germany is the largest member makes for interesting timing.

Lloyds Banking Group rewarded investors with a surprise £2bn. payout, underlining its intent to be the biggest dividend payer among Britain’s banks and its recovery after a state bailout. Whilst Royal Bank of Scotland recently announce a £2bn. loss in 2015.

Despite the good performance of Lloyds, financial services is no longer the biggest sector within the FTSE 100. For the first time since the inception of the Industry Classification Benchmark in 2006, consumer goods has knocked financials off the top spot this month to become the largest sector on the blue chip index.

RSA (Royal & Sun Alliance), which has a large presence in Horsham, was another winner after raising its profit forecasts and dividends despite news that the insurer took a knock from this winter’s floods across the UK.

Housebuilder Persimmon and Barratt Developments were among the few FTSE 100 stocks to beat market expectations. The robust results were welcomed after the housebuilding sector initially fell over fears of Brexit and concerns that overseas buyers and immigration would likely have an impact to housing demand. Later in the week the housebuilders enjoyed a recovery with upbeat mortgage lending data.

Elsewhere, local Shoreham based technical engineering company, Ricardo, reported an increased dividend, a positive outlook and a strong platform for further growth.

Market turmoil and a global economic slowdown will continue to be at the top of finance ministers’ agendas as they gather in Shanghai for the G20 summit.

By David Pegler, Brighton Capital Management