April 25, 2017

Pegler’s market report – 25.04.17: Focus on election talk

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (25.04.17) Business on page 21 under the title Pegler’s Market Report:

Focus on election talk

The French presidential elections remain a major event risk that is likely to cause continued volatility across financial markets. Recent polls indicated a fierce battle between the four candidates in the first round and millions of voters were still undecided so uncertainty remained the name of the game. Although Emmanuel Macron has been labelled as favourite to become the next French President, an unexpected Marine Le Pen victory could deal a symbolic blow to the unity of the European Union and ultimately create a tidal wave of risk aversion. Investors should remain diligent and be prepared to expect the unexpected when dealing with the elections’ repercussions on the Euro.

The leading index of the biggest UK company shares recorded its worst week since early November, after it was hurt by the pound strength in the wake of Theresa May calling a snap general election. Monday offered a bit of a relief rally post the first round of the French elections. Markets are now facing two key elections either side of the English Channel, a heightened stand-off between North Korea and the US, alongside a highly volatile perception of what a Trump presidency will look like.

UK retail sales are falling at the fastest pace in seven years as higher prices put an end to the shopping frenzy of the past year. Sales volumes fell by 1.4pc in the first quarter of the year, one of the biggest drops since 2010. But surging inflation meant that households had to spend the same amount of money in the three-month period to receive that smaller quantity of goods, according to the Office for National Statistics.

Investors lost their appetite for Frankie & Benny’s owner Restaurant Group after it announced the immediate departure of finance chief Barry Nightingale. The owner of Frankie & Benny’s restaurants has seen its chief financial officer quit the company after less than a year in the role. His departure comes just seven months after new chief executive Andy McCue joined to spearhead the company’s turnaround. The business, which also owns Mexican eatery Chiquito, has suffered from declining like-for-like sales in recent years and has issued three profit warnings since November 2015. Mr McCue, the former boss of bookmaker Paddy Power, recently unveiled a new strategy focusing on price cuts and simpler menu options to lure back customers.

Shares in Sky edged up after it said the number of customers deserting the service in its key home market had remained steady in the third quarter, helping it to reiterate its targets for the full year. A rise in Premier League costs dented Sky’s profits despite an 11pc increase in revenue to nearly £10bn.

It cannot go without mention that Brighton & Hove Albion Football Club’s promotion to the Premier League could mean an economic boost for the city running into the hundreds of millions, and puts Brighton & Hove on the sporting map globally.

By David Pegler, Brighton Capital Management