Market report

Fed raises rates | Next edges up | Aston Martin | Weir | Metro


6.30pm: Fed raises rates – Bank of England to follow

The US Federal Reserve lifted interest rates by 0.75 basis points, as expected, and signalled plans to keep raising them, though possibly in smaller increments.

In a policy statement the Fed acknowledged it could take time for rapid increases this year to be reflected in the economy.

The latest increase takes the benchmark lending rate to 3.75% – 4%, a range which is the highest since January 2008.

The Bank of England is expected to follow with a similar 75 basis points rise, the eighth consecutive rise and biggest single hike since 1989. It would take the UK base rate to 3%, the highest level since the 2008 banking crash.

Alongside its rate call, the BoE will give its latest inflation and growth forecasts, with analysts indicating that the UK economy may already be in recession.

4.30pm: London lower

The FTSE 100 closed 42.02 points lower at 7,144.14 ahead of key interest rate meetings in the US tonight and London tomorrow.

10am: Hurricane up for sale

Hurricane Energy has confirmed it is up for sale in the wake of an unsolicited offer to buy the company.

Full story here

9am: Market opens higher

The FTSE 100 was trading 10 points higher at 7,196.28.

8.30am: Hardies deal

Hardies Property & Construction Consultants has acquired Dundee-based quantity surveying firm the John Duguid Partnership.

Full story here

7am: Next

Clothing and interiors chain Next said In the 13 weeks to 29 October full price sales were up 0.4% on last year. This was slightly ahead of expectations.

“We are maintaining our guidance for full year profit before tax at £840m, up 2.1% versus last year,” said the board. Full price sales for the rest of the year are likely to fall 2%.

Charlie Huggins, head of equities at Wealth Club, commented: “After Next cut its sales and profit forecasts 5 weeks ago, the fact it’s maintaining guidance today comes as a relief.

“However, this reasonable progress masks considerable weekly volatility. The last week of September shows sales up a stellar 11%, but in the middle of October sales fell by 3.7%.

“The uncertain economic backdrop is underlined by Next’s caution for the remainder of the year, with the group expecting sales to fall by 2%. Bear in mind that includes perhaps high-single digit price increases, so volumes are quite weak.

“Unfortunately, the worst is probably still to come. Inflationary pressures and higher interest rates will really start to bite next year, especially as home owners come to remortgage.

“Next looks better positioned than most of its peers to weather the storm, in light of its high margins, robust cash flows and strong balance sheet. But 2023 could be a very difficult year the way things are shaping up.”

7am: Aston Martin Lagonda

Luxury car company Aston Martin saw losses before tax in the nine month to the end of September soar to £511.3m against £188.6m last year.

Due to supply chain challenges and logistics disruptions wholesale volumes decreased by 4% year-on-year to 4,060 (YTD 2021: 4,250).

This most notably impacted DBX deliveries in Q2 and Q3. GT/Sports wholesales of 2,184 increased by 9% year-on-year (YTD 2021: 2,002).

Despite lower wholesale volumes, revenue increased by 16% year-on-year to £857m and Q3 revenue increased by 33% to £316m.

Demand across the portfolio with GT/Sports sold out into Q2 2023. DBX orders up by more than 40% year-on-year.

Lawrence Stroll, executive chairman of Aston Martin Lagonda, said: “We have continued to make excellent progress through the first nine months of the year in our vision to become the world’s most desirable, ultra-luxury British performance brand.

7am: Ryanair

Ryanair said its passenger numbers for October rose by 38% compared to the same month last year when Covid travel restrictions were still in force.

Ryanair said it carried a total of 15.7 million passengers last month compared to 11.4 million in October 2021.

7am: Metro Bank

Metro Bank returned to profit in September by keeping a tight rein on costs and has so far seen no sign of increased stress among its customers as Britain grapples with higher interest rates and an escalating cost of living crisis.

The bank set aside a £10 million provision for losses on loans and said it expects its net interest margin to continue to increase through 2023 as interest rates climb.

7am: GSK

GlaxoSmithKline said it beat analyst expectations for its third-quarter sales and profit, months after restructuring the business with the spin-off of its consumer health unit.

The drugmaker, now solely focused on vaccines and medicines, reported an 18% rise in adjusted operating profit.

It declared a dividend of 13.75p/share for Q3 2022. No change is expected to the dividend from GSK of 61.25p/share for FY 2022.

7am: Weir Group

The mining technology group said supply chain and logistics challenges were easing as it reported Q3 revenues up strongly year-on-year.

Jon Stanton, chief executive of the Glasgow-based company, said: “The group performed strongly in the third quarter, significantly increasing orders and delivering sequential revenue growth, while mitigating the impacts of inflation.

“Demand for our aftermarket spares was particularly strong, reflecting the highly resilient nature of our business, as miners continue to maximise ore production. We also made good progress on our strategic growth initiatives, with increasing customer demand for our digital offerings and solutions for more sustainable mining.

“Moving into the fourth quarter, supply chain challenges are easing, we have strong operating momentum and a record order book. Our FY22 guidance for strong revenue and profit growth, operating margin expansion and 80-90% free operating cash conversion is unchanged.”

Global markets

Shares in Asia rose early today, led by Chinese stocks on economy reopening hopes, while the dollar sagged as investors braced for the US Federal Reserve’s policy decision later today, with many hoping for signs of a slowdown in future rate hikes. European markets looked set to extend the cautious optimism.

Hong Kong is holding an investment summit today to rebuild the COVID-ravaged city’s image as the region’s financial hub, with chief executive John Lee pledging it would continue working towards lifting COVID curbs.

Chinese policymakers also reaffirmed their support for Hong Kong and welcomed foreign investors to the city. The Hang Seng index surged 2.5% after a 5.2% rise in the previous session. Japan’s Nikkei lost 0.1%.

The US dollar slipped from near a one-week peak against major peers with traders on tenterhooks before a Federal Reserve rate decision today that should also give clues on the future policy path.

Investors expect the Fed to raise its benchmark interest rate by 75 basis points, the fourth such increase in a row.

For the December meeting, the futures market is split on the odds of a 75- or 50-bps increase amid recent suggestions from Fed officials of a potential slowdown in the tightening pace.

The Dow Jones Industrial Average slipped 0.24%, the S&P 500 shed 0.41% and the Nasdaq Composite was 0.89% lower.

Sterling rose 0.24% to $1.1513, but remained not far from Tuesday’s one-week low of $1.14365.

The Bank of England announces its policy decision on Thursday, and markets expect a 75-bps increase, followed by a 50-bps rise in December.

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