Stocks mixed after progress on debt ceiling deal, Hollywood Bowl scores a strike with strong performance in Canada

“A deal may have been done between President Biden and Republican Speaker of the House Kevin McCarthy but there was still a sense of unease around the US debt ceiling as markets await sign-off from Congress,” says AJ Bell Investment Director Russ Mould.

“Disquiet from various wings of the Democratic and Republican parties was enough to suggest that the agreement cannot be declared a slam dunk just yet, even if an eventual sign-off is by far the likeliest outcome. The response from Asian stocks was mixed overnight and the FTSE 100 started slightly on the back foot after the bank holiday.

“The continued move higher in shop prices in the UK offered a reminder that inflation remains sticky like glue, though there was a glimmer of hope as the surge in food prices eased just a touch. The pressure rising food costs are causing households was reflected in an apparent Government idea, floated in the press, to introduce voluntary price limits for various staple items.

“The decision of the Issa brothers to twin their EG petrol stations with Asda could pose a fresh competitive threat to Tesco and Sainsbury’s, though both supermarkets traded higher early on Tuesday suggesting investors are relaxed for now.”

Hollywood Bowl

“Hollywood Bowl looks to have scored a strike with its 2022 acquisitions in Canada, judging by its latest first half results which revealed a strong contribution from this part of the business.

“There is a genuine bowling culture in Canada which may well be receptive to Hollywood Bowl’s approach of reviving tired and grimy bowling alleys and giving them a bit of shine.

“This approach is continuing to serve the company well in the UK too. While it’s often said there is nothing a company can do about inflationary pressures, that’s not strictly true, with Hollywood Bowl benefiting from management’s prudent decision to hedge its energy costs out to 2024.

“The 9% hike in the dividend is a genuine display of faith in the company’s prospects and suggests it sees demand for ten-pin bowling remaining resilient.

“While the pressures on consumer spending are clear people still need an escape from the day-to-day grind and bowling remains a relatively inexpensive and family-friendly option.

“Nonetheless, Hollywood Bowl will be hoping for an improvement in the economic backdrop as it would be really lucrative for the group if people were ordering extras like food and drink more freely.”

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