Spreadex | Sep 22, 2020 09:36
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%.
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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