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“Investors were upbeat at the start of the new trading week following optimistic comments from US commerce secretary Wilbur Ross about a US/China trade war resolution,” says Russ Mould, Investment Director at AJ Bell.
“Mining stocks Glencore and Antofagasta, Asia-focused life insurer Prudential and several UK banking providers led the FTSE 100 0.4% higher to 7,329.
“Hong Kong’s Hang Seng index jumped 1.7% with healthcare stocks in vogue. The top riser was CSPC Pharmaceutical, spurred by positive comment from a research house.
“China’s SSE Composite index advanced 0.6% with technology and healthcare leading the market."
Mothercare
“On paper Mothercare’s business model should have been a successful one. It is a company which doesn’t have to worry about its target market disappearing overnight because the population is still growing.
“The nature of its products – catering for pregnant mothers and young children – also means it has a large segment of potential customers looking for quality goods and not something that could fall apart or fail to provide comfort. That presented a massive opportunity which has not been grabbed. Ultimately it has proved to be a business that people couldn’t rely on.
“There was a clear need for its services, so why are its UK operations going into administration? One of the key arguments is that it hasn’t invested enough money into its online operations so it could compete against Amazon and other retailers.
“It is often inconvenient for expectant mothers or parents with new-borns to go to the shops to buy essentials, hence why it is preferable to order online and have goods delivered to the home. Mothercare should have realised this situation and slimmed down the number of physical stores years ago, as well as investing more into infrastructure to support efficient deliveries.
“The Trustpilot website has 74% of its reviews for Mothercare classified as ‘bad’, being the worst review category. Customers have complained about poor service, faulty products, inadequate stock availability, and they’ve used phrases such as ‘Mothercare, the store that provides absolutely no care for mothers’. That suggests a business which doesn’t care enough about its customers’ needs and is possibly providing inferior products.”
Airlines: Ryanair and International Consolidated Airlines
“It looks like Ryanair and its pugnacious CEO Michael O’Leary do not share the sunny optimism of their rivals.
“In the cut-throat and competitive travel sector, the recent collapse of Thomas Cook has been seen an opportunity for its peers to gain market share and put up prices as some capacity comes out of the market.
“Ryanair beat forecasts with its second quarter performance, boosted by a big increase in the sale of all the little extras like preferred boarding and seat selection. A key part of the Ryanair model is to squeeze the maximum out of its customers in this way.
“But Ryanair remains grounded amid Brexit uncertainty and the delays to the delivery of new Boeing 737 planes linked to widely-publicised safety issues.
“In response O’Leary is staying true to his reputation as a ruthless operator, outlining plans to scale back or shut down loss-making bases over the winter, resulting in job losses for pilots and cabin crew. Growth expectations have been dialled back and full year profit guidance trimmed.
“In contrast, British Airways’ owner International Consolidated Airlines is in a more expansive mood than Ryanair, agreeing the €1bn purchase of Spanish airline Air Europa.
“The plan is to use the deal to turn its existing Madrid hub into a proper rival for Europe’s other major airports like Heathrow and Charles De Gaulle.
“The acquisition will also give the group an increasingly European flavour – despite its association with one of the UK’s heritage brands.”
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