April 11, 2017

Pegler’s market report – 11.04.17: Investors given something to worry about

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (11.04.17) Business under the title Pegler’s Market Report:

Investors given something to worry about

Stock markets had a bit of a wobble during the week as the combination of a weak jobs report and US missile strikes against Syria had investors on edge. Bonds, gold and high-dividend stocks were seen as safe havens once again. Oil prices hit their highest level in a month.

The March US non-farm payrolls number came in weaker although some commentators believed it was simply weather-related noise. US employers added just 98,000 jobs last month, the fewest in a year, though the unemployment rate fell to a nearly seven-year low of 4.5pc. Economists had expected a falloff in hiring in March after job gains in January and February had averaged a robust 237,000. Those increases had been fuelled partly by strong hiring in construction, which apparently occurred because of unseasonably warm winter weather.

New UK car sales in March were up 8.4% on the year in the “biggest month since records began”, according to the Society of Motor Manufacturers and Traders (SMMT). More than 562,000 new cars were registered as consumers and businesses brought forward purchases before new vehicle excise duty rates came into force on 1 April.

Bovis Homes confirmed that it has rejected proposed merger terms from rival housebuilder Galliford Try. The group said that it is making good progress in improving its customer service, after failing to meet construction targets and being forced to compensate customers who moved into unfinished homes. The group stated that, after replenishing its land bank this year, it is looking to maintain a land supply of four years going forward.

Low cost carrier EasyJet reported a 10.6pc. increase in passenger numbers for March, sending its share higher earlier in the week, although the share price reversed, along with other travel stocks, on news of military action against Syria.

Unilever made gains, as it promised a multi-billion euro programme of shareholder rewards, announced plans to sell its Flora to Stork spreads business and review its dual-headed Anglo-Dutch structure following a recent takeover approach from Kraft Heinz.

Spotify plans to float this year, but without an IPO. The music streaming service plans to go public this year without selling any new shares, in a blow to investment banks hoping to cash in on the float.

Finally, shares in HomeServe traded higher after it forecast that full-year pre-tax profits will be at the upper end of its consensus of £105m-£112m. The firm, which provides home repairs and improvements, said in a trading update that it now reaches more than 100 million households through partnerships, 50 million of which are in the US. Homerserve recently took a stake in Sussex-based Checkatrade, one of the county’s real success stories.

By David Pegler, Brighton Capital Management