Markets recover from Monday’s rout, Domino’s lowers guidance, InterContinental Hotels posts strong second quarter and YouGov makes AI acquisition

“There will be some relief this morning as the FTSE 100 and other European indices arrested the recent market rout and eked out some solid gains after stocks rebounded overnight in Asia,” says AJ Bell Investment Director Russ Mould.

“Fears about a sharp recession in the US, engendered by weak jobs data, remain and the unwinding of the yen carry trade may continue to play out, although whether the market moves are being exacerbated because many traders are on the beach is an open question.

“The next key test will come with the market open in the US this afternoon, with futures prices suggesting a recovery rally will take hold on Wall Street too.

“Investors will have to wait until next week for significant economic releases from the US, with data on consumer sentiment, retail sales and inflation all due. These could help point towards whether the Federal Reserve will cut rates in September and how far they might go.”

Domino's Pizza

“Takeaway outfit Domino’s delivered a set of results which was about as soggy as day-old pizza, guiding for full-year performance at the lower end of expectations after a slower-than-anticipated start to the first half.

“The company has also been affected by passing on a greater proportion of easing food costs to its franchise partners – presumably to help sustain a positive relationship given historic issues with franchisees.

“While a recent boost in business during the Euros football tournament is obviously welcome it is also transitory and the fear will be that a difficult first few months of 2024 are more reflective of people’s willingness and ability to shell out £20-plus on a pizza.

“The company has tried to signal some confidence in the outlook with a £20 million share buyback programme but the market appears unconvinced by this for now and Domino’s really needs to serve up a strong second half to win investors round.”

Intercontinental Hotels

“The Chinese market remains an Achilles heel, as it does for several Western businesses, but otherwise InterContinental Hotels is performing pretty robustly.

“The North American market looks particularly strong and, on a group basis, both occupancy rates and revenue per available room are heading in the right direction.

“The owner of brands like Crowne Plaza and Holiday Inn largely operates on a franchise basis which allows it to grow without employing lots of capital and to focus on things like building brand loyalty and improving technology. It also means the company typically has lots of cash which it can return to shareholders through dividends and share buybacks.

“Recently appointed CEO Elie Maalouf has made ambitious noises about growing in new markets and expanding its brand portfolio – he will now be judged on delivery.”

YouGov

“It seems AI is still capable of generating excitement in the market judging by the reaction to data analytics and polling firm YouGov’s capture of a pretty modest-sized artificial intelligence operation.

“The deal for New Zealand’s Yabble may be modest in size but the company is making a big noise about how it could transform its suite of products.

“Also helping YouGov score better with investors is a slight uptick in guidance after June’s damaging profit warning. Today’s news may revive a little of the clamour for the company to move its listing to the US in the hunt for a higher rating.”

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