Wednesday, 26 June: Market direction today was again dictated by mounting trade tensions and central bank rhetoric. The FTSE opened with small losses as investors again focused on the upcoming G20 meeting that could potentially yield a trade deal between the two biggest economies in the world. At the same time these hopes are always one tweet away from being dashed, and rightly so investors look ahead with a large amount of scepticism. It’s a case of waiting until the ink has dried. Around midday however comments from US Treasury Secretary Steve Mnuchin boosted US futures and global equities. He said that there is a path to complete a deal and that it was 90% there. The remaining 10% could be huge depending on who decides that so again, we can only wait and see and act like this ‘deal’ is a formality and that everyone will be best friends come the conclusion of the G20. Oil continued its recent surge driven through geopolitical tensions, rising well above $65 p/bbl. Data showed that US stockpiles had actually fallen far more than expected, with of course Iranian tensions ‘adding’ fuel to the price surge.
In company news, it was more bad news for Bonmarche (a surprise to very few). The fashion retailer has been struggling for almost as long as you can remember now, and well the landscape for retail is barely changed. After seemingly no self-help solution the company is recommending to shareholders the offer made by businessman Philip Day. Day is the owner of Edinburgh Woollen Mill Group and he has offered almost £6m for the retailer. Bonmarche have now warned losses could be £5-£6m worse than previously expected and shares today fell 26.5%. The future is uncertain for Bonmarche but if they fail to get taken over fairly quickly there won’t be a very long future to consider. Another firm who saw their shares plummet today was RPS Group, it wasn’t a great day for the support services firm. Shares fell 35%.
Shares who had more positive news today included STV, after they strengthen their creative pipeline via the acquisition of a majority stake in Primal Media. It is not expected to add a huge amount of revenue in the near-term, but the update included news of new commissions and improvements to their STV Player and overall investors were pleased with the news. Changing channel? Not today investors, not today (shares did slide 0.4% which was harsh). Bunzl also enjoyed a positive day (for a while) after their update also included acquisitive news. It is a key part of their strategy and during the first half of the year they have spent c.£100m on acquisitions. Shares eventually closed 1.4% down. Ok let’s find shares that ended the day higher….. BP finished higher due to the oil price rise. Wow, ok who else had a good day…… Bear with me here. Ok on the FTSE 250 Petrofac brought it home to close 14.9% higher. The share price movement followed a weak first half update, but their valuation remains very attractive despite the ongoing investigation from the Serious Fraud Office. Obviously on Wednesdays we overlook these things. Wood Group saw a modest 6.6% rise as their half year update showed they were ahead of the prior year. They cited significant operating profit growth and margin improvements.
As we write Wall Street trades higher after Mnuchin’s comments. A name that quite frankly looks like a countdown board, oil is c.2% higher and precious metals have been sent lower as risk appetite gains traction.