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“Markets were in a happier mood on Tuesday as it looked like investors’ fears had subsided over an escalation of tensions between the US and Iran. Stocks in Europe and Asia rallied, with supermarkets, tobacco and airlines among the sectors in demand on the London market,” says Russ Mould, Investment Director at AJ Bell.
“The pound jumped 0.17% against the euro to €1.1779 and up 0.06% against the US dollar to $1.3176. Oil prices eased back after yesterday’s rally, with Brent Crude down 0.5% to $68.54.
“One has to wonder when the attention will shift back to Brexit given we are now only weeks away from the EU departure date. The market always finds something to worry about, so Brexit or even US/China trade relations could quickly return to the agenda if the Middle East issues fade away."
Aston Martin Lagonda
“It is remarkable that a company with such a strong brand can consistently issue bad news. Aston Martin has been one of the biggest flops on the stock market in living memory and today’s trading update does nothing to improve its tarnished reputation.
“Lower sales, higher costs and lower margins aren’t the whole story. You also have to consider the fact that it is now about to draw an additional $100 million of very expensive debt. While strong orders for its DBX vehicle have allowed it to access this additional financing, the sheer cost of this debt (15% interest rate) is not really a good reason for celebration.
“The big question is why wealthy people aren’t buying its luxury cars. Working for this company should be a marketeer’s dream but the team responsible for attracting customers clearly haven’t got the formula right.
“Aston Martin has previously talked about relying too heavily on its ties to the James Bond franchise. Once the latest film had been released, the hype died down and so did the number of people talking about the brand. Efforts to refresh the brand with more of an emotional angle don’t appear to have had the desired effect.
“There is plenty of competition for luxury cars and it seems that Aston Martin is being left behind. For example, Rolls-Royce Motor Cars has just announced its highest annual sales in its 116-year history. Perhaps it is time to get someone new in the driving seat of Aston Martin?”
Morrisons
“The slogan might need to be updated from ‘Morrisons makes it’ to ‘Morrisons makes it by the skin of its teeth’ after today’s trading missive from the supermarket and wholesale food group.
“Despite falling festive sales the company is spared a negative market reaction as worse was pencilled in. The shares had already fallen as investors became nervous ahead of the announcement. Chief executive David Potts promises a ‘strong plan’ for the coming financial year.
“Drawing like-for-like comparison with last year’s showing is made more difficult as this update covers a 22-week period and its counterpart 12 months ago covered just five weeks, which seems an unnecessary complication.
“It does not seem too cynical to assume it is designed to draw a veil over deterioration in trading conditions in recent weeks. Tight control of costs at least means profit expectations for the full year are unchanged.
“The release is a reminder of pressures on the groceries sector which faces a combination of cut throat competition, a challenging consumer backdrop and the increasing shift to ordering the weekly shop online.
“The business is not standing still. Stores are being upgraded, underperforming locations are being recycled out of the portfolio and new sites are being added.
“There is also some experimentation with new formats and concepts like its Market Kitchen food-to-go offering trialled in a new branch in Canning Town as well as a new community store in Bolsover. Time will tell if this represents more than just tinkering at the edges.”
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