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October 3, 2017

Pegler’s market report – 03.10.17: News of a US tax overhaul brightens mood

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in Insights Press Releases

As published in the Brighton Argus (03.10.17) Business section under the title Pegler’s Market Report:

News of a US tax overhaul brightens mood

Shares were generally downbeat following Germany’s election, which saw Chancellor Angela Merkel’s Christian Democrats emerge as the largest party but with a lower share of the vote than expected.

However, European stock markets were lifted on news of Donald Trump’s tax overhaul, boosting hopes that the president can keep his promise of improving economic growth. The president’s plan to slash corporation tax from 35pc to 20pc and a one-off tax cut to repatriate foreign earnings initially pushed up the dollar on currency markets and brightened the mood on equity markets.

Back in the UK, Mark Carney has defended the role of the Bank of England at the 20th anniversary of the central bank’s independence, saying that critics often “confuse independence with omnipotence”. Theresa May used her appearance at the ’20 Years On Conference’ to defend the free market in response to Jeremy Corbyn’s attack on capitalism, the prime minister describing it as the “greatest agent of collective human progress ever created”.

Housing industry commentators reported prices in the south of England have moderated towards those prevailing in the rest of the country with London seeing a particularly marked slowdown. House prices in London fell year-on-year for the first time since the 2008/9 financial crisis, according to data from Nationwide building society. The average property value in the capital reduced 0.6% in the three months to September compared with the same period last year. For the UK as a whole, prices increased by 2.3% year-on-year.

Ryanair is facing legal action by the Civil Aviation Authority for failing to give adequate advice to passengers after cancelling thousands of bookings. Last Wednesday it emerged that the Irish no-frills carrier could be hit with “enforcement action” from the CAA, which claimed it had failed to give passengers necessary and accurate information about their rights after their flights were cancelled, specifically on rerouting and refund expenses. Since then Ryanair has attempted to avoid possible legal action by emailing those affected by more than 20,000 flight cancellations and making clear available options. Whilst Ryanair tries to get a grip on their staffing shortage nightmare it has decided to ditch its bid for struggling Italian airline Alitalia, having made a non-binding offer in July.

Hotel Chocolat’s profits have doubled in the past year as “chocolate lock-ins” helped lure customers, and an investment in a new truffle-making facility helped boost margins. The upmarket chocolatier also reported impressive sales growth, as the business opened 12 new shops and 15 in-store cafes, which serve the brand’s hot chocolate and cocoa-infused ice cream.

Peppa Pig is well on its way to breaking China after racking up 34 billion views in the country since launching there two years ago. British TV and film group Entertainment One, behind the cartoon pig, said the brand’s growing popularity in China as well as in the US was helping it stay on track to hit full-year targets.

By David Pegler, Brighton Capital Management

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