Pegler’s market report – 19.04.16: Further Brexit woes

As published in the Brighton Argus (19.04.16) Business on page 21 under the title Pegler’s Market Report:

Further Brexit woes

The British construction sector has been knocked by Brexit worries, as output has suffered a second consecutive drop. The amount of money charged by construction companies fell again in February, as drops in spending on industrial and commercial projects dragged down growth.

The insolvency firm, Begbies Traynor, which has analysed the financial health of UK companies in the first three months of the year, said 21,061 firms were in ‘significant’ financial distress, and could be tipped over the edge in the event of Brexit. The company said a number of these companies rely heavily on exporting, and are already being hit by uncertainty in the run-up to the referendum. The number in ‘significant’ financial distress has risen 20pc from the year before. This was in spite of the weak pound making UK exports more attractive to international customers.

With now less than 10 weeks to go, the Bank of England has also warned the forthcoming referendum has begun to weigh on the British economy, as it suggested that the vote could cloud its understanding of the UK’s recovery. The housebuilders were yet again one of the worst sector casualties of the ongoing Brexit debate.

Shares in Peppa Pig owner Entertainment One spiked last week amid unfounded reports that British broadcaster ITV is pursuing a takeover of its smaller rival.

Luxury fashion house Burberry was among the biggest casualties on the blue chip index following a disappointing set of fourth quarter results – European markets were hurt by a drop in tourist spending, while demand weakened in Hong Kong.

Shares in baby goods retailer Mothercare tanked after its fourth quarter international sales also slumped by 10.8pc. Other retail stocks, namely JD Sports and Debenhams, enjoyed a positive run.

Royal Bank of Scotland is to close another 32 of its NatWest branches and cut 600 jobs as the loss-making bank continues to slash costs.

Earlier last week Tesco became one of the biggest fallers, after it warned the supermarket price war would impede the pace of its profit growth. The grocer posted operating profits well ahead of analysts’ expectations.

Elsewhere, shareholders sent a warning through Britain’s boardrooms at the first annual general meeting of the season by voting by a massive majority against bloated executive pay packages at BP.