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September 6, 2016

Pegler’s market report – 06.09.16: More data reports from the UK and US


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As published in the Brighton Argus (06.09.16) Business on page 21 under the title Pegler’s Market Report:

Pegler's Market Report

More data reports from the UK and US

It’s that time again – the release of the US jobs report and a relatively unimpressive number for the non-farm payroll indicating an increase of 151,000 jobs in August. While the overall outlook for the US economy still looks encouraging, more positive data may be needed in Q4 before the Fed takes further action on US rates.

The pound has had a bit of a run on the back of better than expected manufacturing activity from the UK. The construction data that followed was less positive, although the downturn has eased considerably since last month. It is likely that construction will continue to struggle until business confidence improves. The Government’s intention to extract a bespoke Brexit deal suggests that negotiations with the EU will be protracted and businesses will lack clarity over the medium-term.

Mid-cap company McCarthy & Stone, which is a leading retirement house builder, has flagged higher house cancellations post-Brexit, causing another wobble in its shares and the sector as a whole. The company also warned that “prolonged housing market weakness” as a result of the referendum could affect its ability to deliver its target of 15pc volume growth during the next financial year.

Go-Ahead, which owns the Southern Rail operator Govia Thameslink Railway has reported profits of nearly £100m over the past year. The company has been heavily criticised for the chaos that has engulfed the Southern network, which has resulted in passengers travelling into London suffering months of delays, cancellations and station overcrowding. It comes after the Government told Southern Rail to “get to grips” with the chaos on its networks after announcing a £20 million fund and a new review board to improve the service.

Finally, news that Berkeley Group will be leaving the main FTSE 100 index in the latest quarterly reshuffle to make space for gold miner Polymetal International. GVC Holdings and Hunting were promoted to the FTSE 250, while Pendragon and Circassia Pharmaceuticals were booted out of the mid-cap index. All changes will take effect from the start of trading on September 19.

By David Pegler, Brighton Capital Management

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