 Banner.jpg)
3 December 2019
The Weekly Note is brought to you by the ALPHA: r² discretionary service team.
A fresh opinion poll has sent sterling higher this morning after showing the Conservative party extending its lead over Labour to 12 points. That, in turn, has contributed to the FTSE 100 underperforming this morning; the index is currently more than 1% lower while most European equity markets are comfortably higher. On Monday, the S&P 500 suffered its worst day since early October amid cautious trade developments.
Trump said that he would raise tariffs on metals imports from Brazil and Argentina, noting the devaluation of their currencies. Washington has also proposed levies on French products in response to a digital tax and threatened the EU with a tariff in reaction to the latest developments in the Airbus-Boeing dispute.
The bump in projected support for the Tories comes despite accusations that the leading parties have tried to politicise a tragic terrorist incident that occurred in the City last Friday. There has been some relatively positive economic news, however. UK consumer confidence, according to YouGov, is showing resilience in the face of general election uncertainty. This upbeat tone converted into a retail boost last month, according to the British Retail Consortium. November's year-on-year sales rose by 0.9% in the build-up to Black Friday.
The Confederation of British Industry's latest forecasts, meanwhile, predict that the economy will accelerate by 2021 if Brexit headwinds subside. It noted, “business continues to show remarkable resilience”. Manufacturers, however, cut jobs at the fastest rate in seven years in November. The IHS Markit/CIPS Purchasing Managers' Index dipped to 48.9 from 49.6.
Globally, manufacturers fared better. The official Chinese PMI rose to 50.2 in November from 49.3, beating expectations. The manufacturing PMI for the Eurozone also improved, reaching 46.9, but although the reading resembles a three-month high, it is still contractionary.
Ferguson, the plumbing and heating merchant, said that first quarter trading in its fiscal year was strong, even though underlying profit came in slightly below expectations. Its US business continues to outperform and it said its UK demerger was progressing as planned. Expectations for the full year remain unchanged.
Cineworld has warned that full-year results could be “slightly below management's expectations”, blaming a lack of blockbuster movies and delayed releases for its disappointing intake. It said that box office revenue fell 13% in the 11 months to December. Cineworld's chief executive said that the integration of Regal, the US chain it bought for $3.6bn last year, was proceeding well.
Three hedge funds will not attempt to delay the £2.6bn takeover of Inmarsat, according to the British satellite communications provider. The hedge funds had previously been looking to delay the High Court's approval hearing, in an effort to secure a higher bid from the purchasing consortium. Shares in Inmarsat rose over 1% in early trading, but have pared back since.
Ocado is raising £500m via a convertible bond, in order to fund dozens of robotic warehouses around the world. The announcement reversed some of the gains the share price made last week when it signed an agreement with Japan's largest supermarket chain, but is a sign of Ocado's long-term global ambition. The bonds convert to equity if the share price climbs by 40-45%.
Finally, the FTSE 100's quarterly reshuffle this week is likely to see Hiscox demoted after the insurer's share price has fallen 12% since the beginning of September. Last month it warned that storms in the Bahamas and Japan would result in extreme cover claims. EasyJet is likely to be promoted back into the index after dropping out in June.
Subscribe today and email [email protected] to register your interest, and receive the full Weekly Note in your inbox every Tuesday.
Walker Crips
Old Change House
128 Queen Victoria Street
London EC4V 4BJ
020 3100 8000
www.wcgplc.co.uk
[email protected]
This publication is intended to be Walker Crips Investment Management’s own commentary on markets. It is not investment research and should not be construed as an offer or solicitation to buy, sell or trade in any of the investments, sectors or asset classes mentioned. The value of any investment and the income arising from it is not guaranteed and can fall as well as rise, so that you may not get back the amount you originally invested. Past performance is not a reliable indicator of future results. Movements in exchange rates can have an adverse effect on the value, price or income of any non-sterling denominated investment. Nothing in this document constitutes advice to undertake a transaction, and if you require professional advice you should contact your financial adviser or your usual contact at Walker Crips.
Walker Crips Investment Management Limited is authorised and regulated by the Financial Conduct Authority and is a member of the London Stock Exchange. Registered office: Old Change House, 128 Queen Victoria Street, London, EC4V 4BJ. Registered in England number 4774117.
Important Note
No news or research content is a recommendation to deal. It is important to remember that the value of investments and the income from them can go down as well as up, so you could get back less than you invest. If you have any doubts about the suitability of any investment for your circumstances, you should contact your financial advisor.
