Natural resources stocks lift FTSE, IMF predicts return to pre-Covid interest rates, retail sales resilient and Hollywood Bowl scores with affordable treat

“UK markets returned from the Easter break with a real spring in their step, helped a positive end to yesterday’s trading session on Wall Street,” says AJ Bell Investment Director Russ Mould.

“While the latest economic data from China has been weak, that provides both the incentive and the ability to ease monetary policy and launch stimulus spending in areas like infrastructure to help revive growth.

“Mining stocks helped power the FTSE 100 higher as investors reacted to the possible implications for demand. Firmer oil prices lifted BP and Shell, the former of which announced a partnership with smaller peer Harbour Energy to develop a carbon capture project in the Humber estuary.

“Anyone groaning under the weight of much heftier mortgage payments may welcome the IMF’s prediction for a return to pre-Covid ultra-low interest rates in the UK.

“However, the implications for the British economy are less than favourable. A combination of falling productivity and an ageing population is expected to tame inflation but at the cost of constraining economic growth. The equivalent of someone being told they can no longer walk but at least they won’t fall over.

“The headlines from the latest retail sales figures may have made for reassuring reading – and retail stocks were higher on Tuesday morning – but there were some signs in the underlying data that the recovery seen in the first two months of 2023 is starting to falter.”

Hollywood Bowl

“There is a misconception that consumers stop spending completely when the economic outlook deteriorates. They might find ways to save money by trading down to cheaper alternatives, but that doesn’t mean leisure activities grind to a complete halt. If life is hard, it is nice to have a few little treats and things like going to the cinema or for a few games of bowling are deemed affordable luxuries.

“That explains why tenpin bowling operator Hollywood Bowl has managed to achieve record revenue for the six months to 31 March. With the cost-of-living crisis still biting, consumers are watching every penny. Equally, the stress of life means it is important to unwind with friends and family and bowling is a fairly cheap way to have some fun without breaking the bank.

“Hollywood Bowl has simplified its food menu, seemingly with the view that it is better to sell a few smaller plates or shared items than nothing at all. At the same time, it has kept its eye on the future and continued to invest in its business, refurbishing sites and making operational efficiencies.

“For example, traditional pin setting systems have historically broken down after approximately 400 games, which has led Hollywood Bowl to replace many of them with pins-on-strings which are much more reliable.

“Having mastered the act of running bowling centres in the UK, the company’s game plan now involves rolling out that business model across Canada while also adding mini golf sites to its homeland territory.”

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