Markets in bad mood as Trump visits the UK, and Kier crashes on profit warning

“Markets remain in a bad mood as Tariff Man arrives on UK soil, with the FTSE 100 extending last week’s losses by falling a further 1.1% to 7,085. “Donald Trump’s state visit includes a business breakfast on Tuesday which leaders from numerous FTSE 100 companies are expected to attend, giving them the opportunity to interact with the US President and UK Prime Minister Theresa May. “Trade agreements are certain to be a hot topic of discussion at the breakfast event in light of the US spat with China and the prospects for Anglo-US trade agreements post-Brexit. “Trump seems to enjoy using the performance of the Dow Jones Industrial Average index as a benchmark for his success as US President. He may therefore point out to his business audience tomorrow that his policies have resulted in the Dow Jones index beating the UK’s FTSE 100 index so far this year with a 6.4% gain versus 5.5% respectively. “Attendees will be more interested to hear how the US expects to cope with China’s trade war retaliation and Trump’s thoughts on the slowdown in the global economy,” says Russ Mould, Investment Director at AJ Bell.

Kier

“The spectre of collapsed outsourcer Carillion means when a rival or peer unveils a profit warning it generally carries greater weight. It is little wonder that Kier lost nearly a third of its value this morning.

“While operating profit will be £25m lower than previous expectations, perhaps more significant is the revelation that the company will no longer escape a net debt position by its year end on 30 June.

“Coming hot on the heels of a botched rights issue, a change at the top and amid continuing pressure on the construction space, today’s profit alert adds up to a pretty sorry picture with the costs of a turnaround programme also spiralling.

“If investors can take any comfort, it is probably from the fact that new CEO Andrew Davies is wasting no time in getting a handle on the situation. The increased restructuring expense is a consequence of him accelerating this process.

“Davies will need to come up with a compelling vision when he announces the results of his initial strategic review on 30 July, otherwise Kier risks being placed firmly on the discard pile by the market.”

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