Thursday, 18 July: As London shares teed-off this morning the results were already piling up. The FTSE followed early expectations of losses, after a negative session on Wall St. was followed by a rough session for major Asian bourses. During the day the strengthening pound put further pressure on the FTSE before the index eventually closed -0.56%. The resurgence in sterling today was caused by a vote that saw measures put in place to stop the new Prime Minister from shutting down Parliament to force the UK’s exit from the EU without a deal.
This morning UK retail sales surprised analysts, returning to growth in the month of June when many had expected to see a decline for the third consecutive month. Retail sales in June were up 1%, with sales in the three months to June +0.7% and on the year they increased by 3.8%. The figures roughly translate into a slowing economy but show we are holding our head above water (avoiding contraction). This was however followed by a worrying report from the UK fiscal watchdog that has predicted the UK will enter a year-long recession if we have an abrupt departure from the EU (we didn’t say don’t worry). Nothing particularly new here and well, we’ve been wrong about predictions before haven’t we?
Onto the markets, one of the main stories today involved ASOS, the popular online fashion retailer. The firm has issued a profit warning for fiscal 2019 due to warehouse operational issues dragging on sales in the US and Europe. It shows the once-dominant online player has more competition than a few years ago and that a strong brand must be reinforced by slick operations. Analysts have criticised incompetent management, and shares dropped 23.2% on the day.
The FTSE 250 outperformed its larger brother today and was home to more of the action, thanks to the likes of EI Group. The pubs business, formerly known as Enterprise Inns, saw shares surge over 38% during the session after Stonegate, the owner of Slug & Lettuce had agreed an offer to take the group over. EasyJet were also among the winners, seeing their shares climb a respective 4% after revenue in the 3Q was 11% higher. The airline has benefitted from the later timing of the Easter holidays and overall higher passenger numbers, they went on to back FY guidance. GVC were among the winners again after their resilient results earlier in the week, this time they announced they’d sold their 50% interest in Sportium A.D for €70mn to their JV partner. Nice cash out for the group.