“Let’s Go”… Say Fewer Thomas Cook Customers

Tuesday, 27 November: Wall Street ended Monday in the green but trade tensions surfaced once again following comments from Trump, leading to a sea of red as Tuesday progressed. Ahead of the upcoming meeting between the two world leaders at this week’s G20 in Argentina, Trump made reference to his upcoming 25% increased tariffs on China, stating that he is unlikely to change his mind, despite what Beijing and Xi Jinping may request. Not to stop there, the US President also warned on further tariffs on Chinese imports that are currently not subject to duties. As a result, global equity indices failed to take off as Tuesday trade began, following a mellow performance in Asia overnight. The FTSE ended the day -0.27%, with falls also recorded across Europe. Sentiment was slightly more positive in the US as we speak, although the Dow Jones has slipped in to negative territory as we speak.

Trump was busy yesterday speaking to reporters. Not only did he weigh further pressure on China but following the UK’s Brexit agreement with EU chiefs at the weekend, Trump commented on whether the UK would be able to trade with the US, further sticking the knife in by saying it “sounds like a great deal for the EU”. Despite May claiming the UK is already in discussions with the US surrounding trade deals, the pound was sent lower against both the euro and dollar. May begins her 2 week roadshow of the UK today, trying to promote the Brexit deal to the British public.

In stock specific news, the major loser in London was Thomas Cook, reporting its second profit warning in as many months. The impact of the UK’s warm summer has resulted in more customers delaying holiday bookings, while looking forward, winter trading is worse than previously thought, with bookings 3% behind last year. Late bookings impacted profit, with the group also grappling with increased competition in holidays. Investors reacted to the group’s decision to cut its dividend, while higher net debt is also a situation to be addressed. Shares fell more than 30% in morning trade, recovering somewhat to end the day -22.62%, resulting in a c.70% fall for 2018 and reaching nearly 6 year lows. Peers in the sector also felt the pinch; TUI falling 2.48% while Dart Group (Jet2) ended the day -2.96%.

While many Greggs fans continue to plough their way through this year’s serving of Festive Bakes, the region’s favourite bakery has reported a strong 8 week trading performance to 24 November. Highlighting a 9% rise in total sales and like-for-like sales growth of 4.5%, the figures looked to be more impressive given the strong comparative period of 2017. The update results in a better than expected profit guidance for 2018, with cost pressures looking to be under control. Shares closed +10.99%, falling back from 2018 highs.

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