Bank of England’s actions further stoke investor concerns, Greencore disappoints and ScS avoids disaster

“The fact the Bank of England has widened its support measures for the market by including index-linked gilts in its programme of government bond purchases will only serve to worry investors even more,” says Russ Mould, Investment Director at AJ Bell.

“So far, its support measures haven’t kept a lid on gilt yields as they have continued to creep up in recent sessions, thereby increasing the cost of borrowing for the government. And today’s news only triggers a very small retreat in yields.

“The Bank of England hopes to avoid a crisis in the market by being a willing buyer of bonds from pension funds who are under pressure. These pension funds will welcome today’s move, but whether the broader market shares the same enthusiasm remains to be seen.

“The key sticking point is that the support measures are only scheduled to last until Friday. Will that be long enough, or will the Bank of England extend the support scheme? Extending it could go one of two ways – the market either applauds the move and breathes a sigh of relief or it gets even more worried, thinking that the extra time suggests the crisis is more severe than originally thought.

“It’s another red day for markets. There are few reasons for investors to regain optimism at present, as we continue to see stocks slide amid a backdrop of doom and gloom. The FTSE 100 fell 0.5% to 6,922, dragged down by insurers and pension fund operators, miners, retailers and banks.”

Greencore

“Sandwich maker Greencore seems to have finally got over the indigestion of problems relating to issues pre-Covid in its US business. With demand picking up again post-pandemic, the company is in a better financial state as debt is reduced, inflation is tackled by successfully putting up prices, and a new CEO is in place in the form of ex-Morrisons boss Dalton Philips.

“Unfortunately, earnings for its most recent financial year are at the lower end of previous guidance after business was disrupted by train strikes and the bank holiday for the Queen’s funeral. With further train strikes expected in the coming months and consumers under pressure to cut casual spending, life may become more difficult for Greencore as it moves into 2023.”

ScS

“With big ticket items firmly off the agenda for cash-strapped consumers, results from sofa seller ScS could have been a lot worse.

“Yes, earnings are down, but its results are still ahead of expectations, and it benefits from having a strong balance sheet with no debt. If you’re going through a tough patch, not drowning in debt is a distinct advantage.”

These articles are for information purposes only and are not a personal recommendation or advice.