Mood Sours Sending FTSE Southwards
Fiona Cincotta September 29, 2020 8:55 AM
The optimism surrounding a US fiscal stimulus deal has been faded, with the mood souring amid a slew of disappointing corporate releases.
Monday’s upbeat mood has been replaced with a sense of caution, sending European bourses lower. The optimism surrounding a US fiscal stimulus deal has been faded, with the mood souring amid a slew of disappointing corporate releases.
Greggs reported like for like sales of 71% of 2019 levels in the 12 weeks to September, this rose to 76.1% over the last four weeks of the period. We always knew this was going to be a tough period for Greggs, office workers which make up a large percentage of Greggs customer base have only just started to return to work and even then, the number of office workers was very depressed compared to pre-covid. Obviously, the fact that it wasn’t included in Rishi Sunak’s Eat Out To Help Out scheme was also a kick in the teeth. On the plus side a click and collet service and the ability to order using Just Eat in several cities could help Greggs pull through.
Closure over the crucial Easter period hit revenues hard at Hotel Chocolat, which reported -14% drop in revenues in the second half, despite a 3% rise overall to £136.3 million. The Chocolat specialist posted a pre-tax loss of £6.5 million compared to a £10.9 million profit last year. These figures highlight the impact of the covid closures on high street stores. Looking for the silver lining, an acceleration of digital and subscription sales is offering some supported to the chocolate specialist, particularly in Japan and America where the business is just taken off and shop openings are being delayed.
The Pound is a top performer as Brexit talks are due to kick off. Reports are mixed and paint a confused picture as to whether a trade deal is as good as done or not. Some reports are suggesting that the EU are indicating that they are ready to work out the legal text for a deal – meaning that the end is in sight. Other reports suggest that there is still a great deal of distance between the two sides. Still the fact that he Pound is on the front foot suggests that Pound traders are optimistic a deal will be achieved. The BoE’s Ramsden, pushing back on negative rate talk also continues to underpin the Pound.
Trump – Biden debate
Looking ahead all eyes are on the US Presidential debate. This debate is expected to be more closely watched than other first debates, given the limited visibility of particularly Joe Biden in the run up. So far the markets have been more focused on covid and additional fiscal stimulus. This debate could bring the election race straight into the foreground. Broadly speaking a win for Biden is considered stock negative and US Dollar negative, although the fact is many unknowns remain.
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