May 10, 2016

Pegler’s market report – 10.05.16: Focus on US jobs data

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (10.05.16) Business on page 21 under the title Pegler’s Market Report:

Focus on US jobs data

Hotel Chocolat, which has stores in Sussex, has priced its IPO, giving it a market value of £167m. The founders of this premium chocolatier and cocoa grower are expected to share a £40m payday. Hotel Chocolat, which was started in 1993, has grown to a significant business of 84 shops and in excess of 1,200 employees. The business is one of few companies to come to the market and brave the choppy waters ahead of the EU Referendum.

Analysts said they see scope for more for Greggs after it spent the last couple of years transitioning to a food-on-the-go market and has delivered strong results. They see upside risk from successful execution on store recycling, IT upgrades and manufacturing modernisation, with scope for further capital returns.

Ten million homes and businesses are set to receive faster broadband, with two million in line for fibre-optic connections, as part of a three-year investment programme unveiled by BT. The UK telecom giant will plough £6bn into the project to upgrade both its broadband and mobile network, building on a pledge by EE to cover the entire country with 4G mobile services.

Food retailer, Morrisons, is making progress towards its recovery after reporting a second consecutive quarter of like-for-like sales growth.

Analysts appear comfortable with the turnaround story at RSA Insurance. The balance sheet has been painstakingly restored and £180m of cost savings have already been delivered, with more to come. Following the sale of the Latin American business, the asset disposal programme is largely complete, meaning RSA is now a much more focused operation.

US jobs growth has slowed to its weakest pace in seven months, setting back hopes for higher interest rates across the Atlantic. Official figures revealed that 160,000 workers found new jobs in April, well below the 200,000 expected by analysts. Last month’s gain appeared tepid compared with March’s 208,000 gain. Meanwhile, the unemployment rate remained at 5%. The numbers, compiled by the Bureau of Labour Statistics, showed that retailers and construction businesses in particular had pulled back on hiring.

With the Republican nomination in the bag, Donald Trump is now turning his attention to how he’d run the American economy if he makes it to the White House. He has already declared that he would probably replace Janet Yellen as chair of the Federal Reserve when her current term expires.

By David Pegler, Brighton Capital Management