Must read: market rally, Greggs, Royal Mail, Wizz Air

Bombed out stocks are attracting buyers, but can the October recovery continue? Our head of investment runs through today's big news.

GLOBAL MARKETS 

European markets are in rally mode, with the CAC in France surging more than 2.5%. The FTSE 100 is up by more than 1%, while gilts are moving higher and the pound is also staging gains, trading back above $1.13.

Risk-on sentiment has lifted global markets, with Asia rallying and momentum carrying forward to the European session.

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GREGGS 

Shares in Greggs (LSE:GRG) are trading sharply higher thanks to its third quarter trading update, which saw like-for-like shop sales up 9.7% with total sales up 14.3%. The bakery maintained its full-year guidance, with cost inflation still expected to hit 9%. It introduced a small number of price increases this week, or 5-10%, to offset some of its rising costs. Greggs continues to expect around 150 net shop openings this year. 

Investors are cheering today’s impressive sales performance. The fact that the bakery is not expecting any material profit growth this year was already priced into the shares when it was announced in March.

Although the company faces the stiff challenge of dealing with cost inflation from food, energy and wages, Greggs is well positioned as a defensive play to navigate a UK recession thanks to its no frills, cheap, extremely popular offering of drinks and snacks. Its stores are cleverly placed across the whole country, which allow Greggs to be geographically diversified if some parts of the country suffer more than others in an economic downturn.

Year-to-date the stock is down by more than 40% amid the market turmoil, which means the shares are now heavily discounted and much more attractively valued than they were in January.

ROYAL MAIL

Royal Mail (LSE:RMG) has changed its name from Royal Mail PLC to International Distributions Services PLC. In July, the postal service said this was to reflect the increased importance of its international business, GLS to the group and its strength in markets outside the UK. 

The company's stock market ticker will become "IDS" from 8am on 5 October.

Royal Mail has had a tough time in the UK amid an onslaught of nimble competitors, ongoing strike action and a structural decline in letter volumes resulting in a quarterly loss of £92 million in the UK. However its international business has been faring very well with profits of £94 million.

Although the company fared well during the pandemic thanks to increased parcel demand, this year has been extremely tough with the summer of discontent among workers and surging cost inflation. Perhaps the rebrand provides an opportunity for the company to turn over a new leaf. Whether this will be enough to offset its more than 60% share price slide this year remains to be seen.

WIZZ AIR 

Shares in Wizz Air Holdings (LSE:WIZZ) are trading higher after the airline reported a jump in passenger numbers for September. It carried 4.6 million passengers, rising 52% year-on-year with a load factor (percentage of available seating capacity that has been filled with passengers) of 87.1%. 

It has been a difficult summer for the airlines sector with strikes, delays, queues and cancellations. But the back to school month has seen a strong year-on-year improvement for Wizz Air, partly due to low comparables last year.

Shares in Wizz Air have suffered heavy losses this year, shedding two-thirds of their value, with Russia’s invasion of Ukraine weighing heavily on its share price. Today’s update comes as a welcomed development for investors as increasing numbers of passengers take to the skies.