May 24, 2016

Pegler’s market report – 25.05.16: G7 finance ministers more optimistic about world economy

by David Pegler

in Insights Press Releases

As published in the Brighton Argus (24.05.16) Business on page 21 under the title Pegler’s Market Report:

G7 finance ministers more optimistic about world economy

According to German finance minister Wolfgang Schaeuble, the G7 nations are now more optimistic about global economic growth. This news came despite the US Treasury’s recommendation for the leaders to continue to discuss global economic risks and what tools they have available to deal with them. Meanwhile, the Fed’s most recent minutes put the possibility of a June US rate hike back on the table.

The pound had a much better week, after it hit a three-and-a-half month high on the back of robust retail sales data and an influential Brexit poll, which showed that 55% of those surveyed supported staying in the European Union.

Shares in suit hire store Moss Bros climbed steadily upwards after it posted a 5pc rise in sales in the first 15 weeks of the year less than a month after its high street rival Austin Reed collapsed into administration.

Elsewhere, shares in Ladbrokes leapt after the British competition regulator said the bookmaker and Gala Coral will have to sell around 350 to 400 shops to win clearance of their merger.

Travel and leisure stocks were dealt another blow after Egyptian officials said the crash of Egypt Air flight MS804 travelling from Paris to Cairo was more likely a terror attack than a technical error. As a result there was increased trading activity in shares of TUI, IAG, EasyJet and Intercontinental Hotels.

Royal Mail failed to deliver, and its shares were weaker, after it forecast higher-than-expected costs to restructure its UK operation due to fierce competition in postal and parcel markets. Analysts cautioned that the postal delivery company may have little to no defence against threats from companies such as Amazon.

Shares in Mothercare jumped as its turnaround plans helped the baby goods retailer to crawl to first full-year profits in five years.

Finally, Shoreham based Ricardo is creating interest among analysts as the world-leading multi-service engineering consultancy is likely to assist further with the development of greener car launches ahead of what looks to be a gradual switch to electric-powered vehicles. This has come after a series of high-profile scandals in the car industry have forced regulators to tighten up legislation, pressuring manufacturers to get their acts together.

By David Pegler, Brighton Capital Management