Pegler's market report - 05.04.16 - Brighton Capital Management

Pegler’s market report – 05.04.16

As published in the Brighton Argus (05.04.16) Business on page 21 under the title Pegler’s Market Report:

Travel shares prove resilient

TUI Group, the world’s largest tour operator, which has a significant presence in Crawley, proved to be remarkably resilient in its latest trading statement. The owner of Thomson and First Choice said that summer bookings are on track this year, despite worries around certain holiday hotspots such as Turkey and Egypt. The trading update was taken as a positive by investors, given the recent share price weakness. The previous week, tourism stocks were hurt by the terrorist attacks in Brussels.

While nervy holidaymakers may be causing some apprehension over travel shares, political unrest and terror fears have yet to unsettle the buoyancy of the world’s largest cruise operator. Carnival reported its first-quarter results during the week and as has been the trend of late, the headline numbers were strong and came in ahead of management’s restrained guidance.

Next continued to feel the pain after analysts slashed their target price following the retailer’s recent profit warning. City commentators also pointed out that the Easter weekend storms were likely to add to its troubles. Meanwhile, further bearish comments on the entire retail sector, resulted in downgraded ratings for Poundland, Marks & Spencers and Debenhams. Brokers blamed the revisions on the possibility of a Brexit, adverse foreign exchange rate movements and a growing unemployment fear risk, which they believe could hurt consumer confidence.

News last week suggested thousands of jobs hang in the balance across the British steel industry after Tata Steel announced plans to offload its UK arm. It comes amid increasing global competition and according to recent reports the long-term decline in the industry may deepen further.

Mortgage rates for two and three-year fixed rate deals fell to record lows in February, with borrowers accessing the largest number of products since 2008, according to new research. The average two-year fixed rate mortgage fell to 2.54pc in February, down from 2.56pc in January.

With the Bank of England unlikely to raise the UK Bank Rate anytime soon following a unanimous decision earlier this month by the Monetary Policy Committee (MPC) to keep it at 0.5pc for an 84th consecutive month, low mortgage rates are expected to continue.