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Mild Rebound Following Monday Carnage, Differing Fortunes For Whitbread And King..

Published 22/09/2020, 09:36
Updated 21/10/2020, 09:15

In something of a predictable move, the European markets bounced back from Monday’s colossal losses with a fairly mild rebound this Tuesday.

Climbing 0.5%, the FTSE 100 tried to muster the energy to reclaim 5850, falling just short. In a more accurate reflection of how covid-19 is impacting the UK economy, however, the FTSE 250 dipped another half a percent, reflecting the pressures on the hospitality and services sectors ahead of what is expected to be the announcement of a 10pm curfew on pubs and restaurants.

Two Tuesday updates captured the varying fortunes of UK firms on a sector-by-sector basis. Whitbread (LON:WTB) – which covers not one, but two badly hit areas with its hotel and restaurant chains – revealed it was cutting 6000 jobs after an 80% first half drop in sales. Investors sent the stock 3% lower in response.

In contrast, B&Q-owner Kingfisher (LON:KGF) blasted past first half forecasts, posting a 23% surge in adjusted pre-tax profit to £415 million – £36 million more than analysts had estimated – as like-for-like sales aggressively rebounded in Q2, climbing 19.5% after a 24.8% contraction in Q1. Crucially that momentum also has carried into Q3 (to date), with LFLs up 16.6%. This as UK customers were drawn to DIY for a variety of reasons, from turning the home into an office and/or classroom, to simply finding something to do. With investors understandably impressed by Kingfisher’s handiwork, the stock jumped close to 7%.

The Eurozone indices were most robust in their rebound than the FTSE. The DAX rose 1.2%, pushing to 12670, with the CAC back above 4800 following a 0.7% increase.

Pulling back from its peak 800-point plus decline, the Dow Jones nevertheless closed down 500 points on Monday night. And currently it has no plans to recover those losses, with the futures suggesting a flat open from the American index.

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