FTSE held back by housebuilders amid cladding cost reports, while Tortilla delivers knock-out trading update

“The FTSE 100 stalled around the 7,500 mark on Monday morning as investors remain watchful of lingering Covid risks and the dangers posed by inflation,” says AJ Bell Investment Director Russ Mould.

“Despite some tentative positivity in Asian trading, the UK index was not helped by a weak start for the housebuilding sector.

“The UK Government is reportedly looking for property developers to take on a greater share of the costs of repairing dangerous apartment blocks in the wake of the Grenfell tragedy in 2017.

“Many flat owners have been left with onerous costs for replacing flammable cladding and the latest reports on who will foot the bill should come as no surprise to the sector in that context.

“The housebuilders have benefited from generous incentives, such as Help to Buy and the mortgage guarantee scheme, in recent years. However, state support is not a one-way street and the sector needs to do its bit to look after its customers.

“With a quiet start to the week for big corporate and economic announcements, markets could remain in a holding pattern until Wednesday when US inflation figures will reveal just how acute inflationary pressures are in the world’s largest economy.”

Tortilla Mexican Grill / Nightcap

“It’s always better to under-promise and over-deliver and Tortilla Mexican Grill has certainly found the recipe to surpass expectations.

“With so many companies who joined the stock market in recent years failing to live up to the hype, it’s refreshing to see Tortilla pleasantly surprise with its first trading update as a listed business.

“This is even more impressive given it managed to have a knock-out fourth quarter, a period which included the rapid spread of Omicron across the country and a sudden drop in people prepared to go out and socialise for fear of catching the virus and having Christmas ruined.

“Tortilla seems to be ticking all the right boxes in terms of its strategy. It is adding new sites run both by the company and by franchisees. A partnership deal with Merlin Entertainments should open doors to new opportunities in theme parks, and an existing agreement with SSP continues to flourish with the addition of more travel hub sites.

“Consumers are increasingly demanding decent quality food on the go, and some of the most successful operators are the ones offering fresh products rather than chucking something bland in the microwave. Tortilla is riding this trend and its focus is now on gaining scale across the UK.

“Nightcap joined the stock market a year ago and despite initial excitement with investors, the shares have been drifting since last May. Like Tortilla, Nightcap’s latest update also comes across as upbeat, albeit recognising how Omicron has disrupted recent trading.

“The business was hit hard by Christmas parties being pulled at the eleventh hour, yet it remains upbeat that more than two thirds of these bookings will be honoured in the coming months.

“Both Tortilla and Nightcap will be hoping that Omicron cases have peaked in the UK and the country returns to a sense of normality soon. Greater movement of people across the UK and a willingness to go to more crowded places should in theory raise the chances of people wanting to grab food on the go, as well as have some nights out with friends and family.”

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