Pegler’s market report – 14.06.16: More Brexit jitters

As published in the Brighton Argus (14.06.16) Business on page 21 under the title Pegler’s Market Report:

More Brexit jitters

Jitters over a possible Brexit are adding to the lure of the UK’s safest asset – demand for the safety of British Sovereign debt pushed the yield on 10-year gilts down to a fresh record low as oil prices came off their recent monthly highs and reignited money managers’ concerns over deflation and limp global growth. Some investors are also taking profits in light of the backdrop of the up-and-coming US Federal Reserve meeting on Wednesday, and the EU referendum the following week.

Housebuilders had a tough time again last week, as the one of the latest industry surveys revealed falling demand for property. The Brexit effect taking its toll again and dampening confidence within the sector.

The utilities sector was one of the few groups of shares to make any headway. Companies such as National Grid, United Utilities and SSE generally require significant infrastructure; these firms often carry large amounts of debt and are therefore sensitive to changes in interest rates. Given that central banks across the world’s advanced economies are now looking less likely to make any moves over the summer months, the sector is seen more positively for its defensive qualities.

WH Smith, the high street and railway station retail stalwart, exhibited some poor stock performance despite a seemingly reasonable financial update. Overall sales in the third quarter of its financial year edged up by 2pc, which initially kept the stock almost steady. However, the high street arm generally traded poorly as sales fell 4pc compared with the previous year.

Elsewhere, shares in Ocado lost support after last week’s news of the launch of Amazon Fresh in London. Amazon Fresh in the US provides free same-day and early morning delivery on orders over $50 including thousands of Amazon items, fresh grocery and local products with your Prime Fresh benefits.

Recent research suggests that disappointing football results in major competitions can have significant impact on investor mood. A recent poll showed that being eliminated from a regional tournament like Euro 2016 could lead to the national stock market falling by 0.3pc the next day, so let’s all hope our team go far.

By David Pegler, Brighton Capital Management