Last week’s big FTSE 100 fall showed the markets were getting spooked by the prospects of a no-deal Brexit. Wednesday had the biggest one-day fall we’ve seen since 2016, with the UK’s top index losing 3.2% of its value in a day. While that’s really not such a big deal, as it only set the index back to the levels it was at five weeks previously, it did suggest fears of a post-Brexit recession are rising once again.
Monday hasn’t offered much reassurance, with the Footsie hardly moving all day, just as it has remained flat overall for 12 months now. I don’t think that’s surprising as we’re set to have the EU’s latest Brexit decision hanging over us all week. French President Emmanuel Macron said we’ll have a decision at the end of the week over the possibility of a new departure deal.
September retail slump
There’s been no real news from any of our biggest companies, but according to the British Retail Consortium and KPMG, we’ve had the worst September for retail sales since records began in 1995 as no-deal Brexit fears gather momentum. Retail stocks have largely escaped any fallout just yet, but direct shopping retailer N Brown Group, which is also burdened by debt, slipped into the 10 biggest fallers of the day. I think we could see pressure on the sector as the week progresses.
The construction supply industry was hit after building materials provider SIG issued a profit warning along with news that it’s selling off a couple of divisions to shore up its balance sheet. That helped push Travis Perkins and Howden Joinery into the biggest fallers list at various times during the day.
Last week’s share price momentum from Metro Bank continued into Monday, pushing the troubled challenger bank’s shares up a further 9% in early trading, though the price fell away as the day progressed. Despite last week’s uptick, I just don’t see a bank that couldn’t attract takers to its recently failed 7.5% bond offering as attractive, and I’m keeping well away.
Speaking of banks, Kazakh banking firm Kaspi.kz was set to become the latest overseas bank listed on the London Stock Exchange with a flotation that would have seen $500m in shares on offer. But Kaspi.kz, partly owned by Goldman Sachs (which operates Kaspi Bank, Kazakhstan’s third-largest bank) has called off the flotation. The change of plan was put down to “unfavourable and uncertain market conditions, particularly in the technology sector.”
And so far, the HSBC Holdings share price has held steady after news of the possible loss of up t0 10,000 jobs as part of new cost-cutting measures introduced by interim CEO Noel Quinn. We need to keep our eye on the rest of the UK-listed banks, as similar moves are expected from Barclays and a number of other European banks.
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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Barclays, Howden Joinery Group, and HSBC Holdings. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.