The FTSE 100 began the day on the back foot, weighed down by lingering fears of contagion and potential regulatory intervention in the banking sector.
Barclays topped the list of losers among European banks, as investors grapple with heightened uncertainty amid inflation, interest rates, geopolitical tensions, and the recent banking crisis.
Russ Mould, Investment Director at AJ Bell, suggests that while the rate-hiking cycle might be nearing its end, markets are far from being in the clear.
“A see-saw session on Wall Street overnight spoke to an edgy market mood, and the FTSE 100 started the day firmly on the back foot on Friday,” says Mould. “It is difficult to see a path through the current turmoil which doesn’t involve some pain.”
UK retail sales exceeded expectations in February, though year-on-year figures remain weak. Fragile consumer confidence and a divergence between the services and manufacturing sectors in European PMI data could signal a more pronounced economic slowdown.
Wetherspoons reported pre-tax profits down over 90% from 2019 levels for the year ending 29 January 2023, as inflation continues to take its toll. Despite the pressure on earnings, the company continues to invest in its estate and streamline operations by selling off pockets of pubs. Founder Tim Martin remains optimistic about the company’s ability to weather ups and downs by catering to customer preferences.
“Three years since the world was put into lockdown and Covid caused significant economic and societal disruption, Wetherspoons is still dreaming of a profitable recovery,” Martin says. “Wetherspoons has been through plenty of ups and downs during its existence and always seems to be able to survive intact.”
Travel operator TUI’s share price took a hit following a significant discounted fundraise, which aims to alleviate the company’s pandemic-induced debt burden and free up cash for growth investments. A brief trading update suggests continuing momentum in bookings but highlights the need to reduce interest payments.
“A big discounted fundraise at TUI is hurting the share price in the short term but in the longer term, it may be the route to a more meaningful recovery for the travel operator,” notes an AJ Bell spokesperson. “The question is whether the money raised will be sufficient. Shareholders may stomach the dilution once, but if TUI is forced to come back with its begging bowl again before long, it may receive short shrift.”