Pearson Leads FTSE Lower
Fiona Cincotta January 16, 2020 4:54 PM
The FTSE is heading into the close hovering around support at 7600 following a disappointing day for corporate updates
Optimism surrounding the signing of the US – China trade deal quickly faded, and the FTSE was pretty much on the back foot from the start of trading. The FTSE is heading into the close hovering around support at 7600 following a disappointing day for corporate updates, with Pearson, Whitbread and Hays among the laggards. The stronger above $1.3050 is adding the FTSE’s woes.
Pearson’s slumped to a 10-year low shedding over 8% following yet another profit warning from the troubled educational resource provider and publisher and the announcement if the departure of the CFO Coram Williams. With the stock down an eye watering 60% so far this year and we are unlikely to have seen the end of the selloff here. The departure of Coram Williams so soon after CEO John Fallon stepped aside will no doubt complicate the turnaround plans at the struggling firm, pushing any recovery further into the distance.
Whitbread disappointed with its update, as room sales fell 2.1% in the three months to November. Impacted by weaker business and consumer confidence, business and leisure bookings took a hit. This update was prior to the UK general election, and whilst the share price has jumped 20% since December on improved political and Brexit clarity, the reality is any improvement in confidence will take time to filter through into improved UK investment spend and sales.
Pound holds gains
The pound has managed to remain in positive territory for a third straight session. The pound pushed above $1.3050 despite growing concerns of an imminent rate cut from the BoE and despite a solid increase in US retail sales. US retails increased 0.3% month on month, with core retail sales beating forecast at 0.5%; a good sign for the US economy. With strong job creation, 2.9% wage growth and consumer confidence at the highest level since May, households have been spending in the festive period.
GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.
No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.