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[London] Midday market report, September 21st, 2016

Post-BoJ gains continue; Majestic Wine and Bonmarche both fall by 25%

Despite an increasing whiff of scepticism surrounding the effectiveness of the newly announced measures, the markets continued to enjoy a Bank of Japan-boost this Wednesday.

The FTSE slipped from its morning highs following news that its deficit reduction plan was ‘still off course’, but still managed to keep above 6850 with a 15 points increase; the Eurozone indices fared better, with both the DAX and CAC rising 0.9% These gains are expected to continue into the US session, with the Dow Jones once again aiming to secure a post-18200 finish with a 65 point jump after the bell. It will be interesting to see whether the markets get a case of the jitters as the afternoon goes on and the Fed meeting approaches, or whether investors’ confidence that the US central bank won’t act this month will allow this present level of growth to remain unhampered.

Beyond the BoJ discussion there were some pretty ugly declines for a pair of the UK’s smaller retailers. It looked like someone at Majestic Wine had smashed a crate of claret over its chart this Wednesday, with the stock plunging 25% as it warned of a potential earnings shortfall in its commercial division as well as a costly failed advertising campaign for its Naked Wines brand as it attempted to break into the US. At the time the Majestic Wine/Naked Wines merger was celebrated as a savvy consolidation of the two companies; now, however, it looks like CEO Rowan Gormley may be pushing the firm to expand too quickly, resulting in the direct mail mess in the US.

Like Majestic Wine, Bonmarche lost 24% in value this morning, becoming the latest high street store to blame unseasonable weather for a shoddy sales showing. The glorious weather recently seen in the UK had an adverse effect on the success of Bonmarche’s autumn range, causing the company to lower its profit projections for the year. This is going to be a persistent issue for the sector as a whole going forwards, meaning fashion retailers may need to move away from the strict seasonal structure that many currently operate under.

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This article does not constitute investment advice. Do your own research or consult a professional advisor.

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