Greggs warns of job cuts, Grainger rental growth 'strong'
London open
The FTSE 100 is expected to open six points lower on Tuesday, having closed up 1.46% at 5,927.93 on Monday.
Stocks to watch
High Street baker Greggs warned of job cuts in the face of expected lower demand and the closure of the government’s Job Retention Scheme ends next month. The company on Tuesday said like-for-like sales in company-managed shops averaged 76.1% of 2019 levels in the four weeks to September 26 - in line with planning assumptions. “We have completed a review of our activity and requirements in every part of the business and are now proposing a series of changes which are the subject of a collective consultation with union and employee representatives,” Greggs said in a trading update.
Grainger reported “strong” rental growth ahead of the end of its financial year on Tuesday, at 3% for the 11 months to the end of August, as on-time rent collections were described as “consistently high” at 95%. The FTSE 250 company said rental growth for its private rental sector homes was 2.5%, while its regulated tenancies saw growth of 4.7%. Sales profits for the year ending 30 September were expected to be “broadly in line” with the prior year as well.
Newspaper round-up
A prolonged battle against Covid-19 would swallow up a large chunk of the government’s planned increase in public spending and force the chancellor into an unenviable choice between fresh austerity, higher taxes or more borrowing, a leading think tank has warned. The Institute for Fiscal Studies said that even if only a quarter of the extra £70bn allocated by Rishi Sunak to fight the pandemic had to be repeated in future years, the Treasury would either have to find more money than set aside in this year’s budget or announce cuts. – Guardian
Sadiq Khan has warned that the capital faces a bleak future of crumbling infrastructure and a return to the “bad old days” of unreliable tube and bus services unless the government steps in with almost £5bn of funding. The London mayor said that without further central government support, investment would stall and infrastructure would collapse, affecting the whole of the UK’s economic recovery. – Guardian
Staff at Britain’s biggest funeral provider, Co-op Funeralcare, are using “tricks” to increase the profits it makes from families bereaved in the wake of the coronavirus lockdown, the Telegraph reported. Branches in south London received emails from their boss encouraging them to steer clients toward more expensive funerals and to restrict more affordable options to unpopular times of day to make them less attractive. – Telegraph
The runners and riders for William Hill’s shops were starting to line up yesterday after Caesars Entertainment made clear that it would only be keeping the British group’s US operations. Betfred, the bookmaker owned by the Done family, is believed to be interested in acquiring William Hill’s 1,400 shops to boost its estate of 1,500, while two parties, one a private equity firm, are thought to have indicated an interest in its entire non-US business. Fred Done, 77, the Betfred boss, has spent the past two years building up a 6.1 per cent stake in William Hill at depressed levels. “Even if he doesn’t get his hands on William Hill’s shops, he is sitting on a handsome profit from his investment in the shares. Typical Fred,” one former colleague said. – The Times
Côte Restaurants became the latest casual dining chain to undergo a restructuring after being acquired by new investors via a pre-pack administration. The group of almost 98 French brasseries will suffer the closure of three outlets operating under its other brands — Limeyard and Jackson & Rye — with the loss of 56 jobs, but the Côte brand remains intact. The sale of the Côte Restaurants business to Partners Group, a private markets investment manager, secures the future of 94 restaurants and 3,148 jobs. – The Times
US close
Wall Street began the week on a positive note, as M&A news and hopes for a fourth round of fiscal stimulus offset uncertainty around the upcoming US elections and the pandemic.
On Sunday, the Democratic speaker of the US House of Representatives, Nancy Pelosi, voiced support for another government spending package, but said the White House would have to accept "much more spending" - possibly $2.4trn more.
Just a few days before, some economists had thrown in the towel regarding the chances of more stimulus being approved before the 3 November elections.
By the end of trading, the Dow Jones Industrial Average had climbed 410.1 points to 27,584.06, alongside a gains of 53.14 points on the S&P 500 to 3,351.6 while the Nasdaq Composite added 203.96 points to 11,117.53.
Investors were also expectant - cautious even - ahead of a televised debate scheduled for the next day between the two presidential contenders, Donald Trump and Joe Biden.
Some analysts were also wary ahead of Friday's monthly non-farm payrolls report, which might validate concerns that the US jobs market is indeed about to stall.