Markets calm ahead of next political reshuffle, InterContinental Hotels in recovery mode, Wickes’ sales growth grinds to a halt and Snapchat ad warning spooks social media space

“Given the unprecedented events involving British politics in recent weeks, investors are hoping for less volatility and more stability in both the government and on the markets,” says Russ Mould, Investment Director at AJ Bell.

“UK markets on Friday were calm as the nation sat tight, in anticipation of the third Prime Minister of the year being appointed at some point over the next week. The FTSE 100 dipped 0.4% to 6,916, while the more domestically focused FTSE 250 index slipped 0.7%. Thirty-year gilt yields remained just below 4%, while the pound held firm at $1.1204.

“Even though there is some sense of peace in the markets now, this could all change next week when we have a clearer idea of who is in the running for Number 10 and how each candidate might reshape the country’s policies to avoid economic shocks.

“Heading up corporate news in the UK was Intercontinental Hotels. Its average rate per available room has shot up by 28% as demand returns to the travel sector. The thorn in its side is China where tough restrictions around Covid have disrupted trading once again, enough to spook investors and send the share price down 3%.

“Sales growth has ground to a halt for DIY products seller Wickes. While the company seemingly takes a positive view, saying that sales have stabilised after weakness in previous quarters, the company still faces the fact that the DIY boom seen during the pandemic has lost momentum.

“Clothing seller ASOS continued its descent as investors worry about its position in a cost-of-living crisis. The feedback from its latest analyst presentation was negative, with concerns about the company going from a net cash to net debt position and a lack of confidence in its strategy to survive an economic slowdown. The shares are now down 78% year-to-date.”

Snap Inc

“Oh Snap! Shares in the owner of social media platform Snapchat collapsed in after-hours trading as it posted widening losses and warned of an inflation hit to advertising spend.

“The numbers themselves were reasonably resilient even if restructuring costs helped push the company into a loss.

“But revenue growth is clearly slowing – to such an extent this is the slowest growth since the company floated five years ago.

“And, while its warning on advertising hit shares in other social media platform owners like Meta and Pinterest, it could be that the relevance of Snapchat with a fickle youthful user base is starting to wane.

“The emergence of TikTok and continuing popularity of Instagram means there is a significant competitive threat. Snapchat might not fade into the background soon, after all it is still adding users, but if advertisers are starting to sniff that it’s all gone a bit stale, they might start turning their noses up at using the platform to engage with consumers. Particularly given budgets are squeezed and that will force media buyers to be more selective.

“The privacy update to Apple’s operating system has, like it has to several peers, also damaged Snap’s ability to track users across the web and further weakened its online advertising business.”

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