Stock markets movements year to date and TalkTalk Telecom

Friday, February 1, 2019 - 10:20

“So far 2019 hasn’t been that bad for investors given nearly all major market indices have delivered positive gains. India’s S&P BSE 100 is the only major index to be in negative territory, otherwise there are roughly 4% to 6% gains across Europe, 7% to 9% gains from the US and more than 10% from Russia and Brazil. “Risk appetite seems to be returning to the market with investors showing signs of optimism regarding a positive resolution to the US/China trade war, in particular. The UK domestic-focused FTSE 250 index has benefited from a stronger pound as investors hope for extra time with Brexit negotiations and/or for Prime Minister Theresa May to avoid a no-deal outcome. “The FTSE 100 is 3.8% higher year-to-date but has been stubbornly refusing to get back above 7,000 despite several attempts in recent weeks. It certainly looks like having another go on Friday with a 0.2% rise in early trading to 6,984. Hitting the magic 7,000 should have a positive psychological effect on investors and potentially put a bit more wind in the market’s sails,” says Russ Mould, Investment Director at AJ Bell.

Stock markets movements year to date

Russia – Trading System index +13.4%

Brazil – Bovespa Stock Index +10.4%

US – Nasdaq 100 index +9.1%

Hong Kong – Hang Seng index +8.1%

US – S&P 500 index +7.9%

UK – FTSE 250 index +7.2%

US – Dow Jones Industrial index +7.2%

Germany – DAX Xetra index +5.8%

France – CAC 40 index +5.7%

Japan – Nikkei 225 index +3.9%

UK – FTSE 100 index +3.9%

China – SSE Composite index +3.6%

TalkTalk Telecom

“Sometimes a good question to ask when assessing a business is ‘if it didn’t exist would I set it up today?’ The answer with mobile and broadband provider TalkTalk seems likely to be a no.

“It operates in a highly competitive market with a brand which was significantly diminished by a big cyber security attack in 2015 and with a patchy reputation for customer service. It often features in Ofcom’s list of most complained-about broadband providers.

“As today’s profit warning reveals the company is achieving customer growth, even beating expectations on this metric, but only by offering deals to entice people onto its network.

“While this means the company is on track to beat its 150,000 target for new broadband customers for the financial year, it looks set to come at the cost of margin pressure.

“The company is also struggling to get more out of its customer base with average revenue per user dropping slightly year-on-year.

“Accounting changes are another factor behind the earnings shortfall as well as spend on providing fibre connections directly to households (FTTP). Some analysts have raised concerns about the risks and costs associated with building an FTTP network.”

These articles are for information purposes only and are not a personal recommendation or advice.

The daily market update is written by Russ Mould, AJ Bell’s Investment Director and his team. The article highlights the movement in the main index, winners and losers on the day and any macro-economic announcements.

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