Pivot watchers need patience
Macro & Overnight
US markets slipped as the US Department of Labor jobs data dented hopes for the Fed to pivot or for a deceleration in hikes. The employment market is proving resilient despite the ISM manufacturing index slipping -0.7pp to 50.2 in October, its lowest since May 2020.
All eyes are fixed on the Fed interest rate hike decision tonight. 75 bps looks baked in. The pivoters waiting for a white flag of monetary easing look like they will need to remain patient.
The £ is steady, and the benchmark oil price is rising.
UK manufacturing PMI for October fell to a 29-month low of 46.2, a third straight monthly contraction. Output, new orders and exports all declined. Any reading below 50 indicates contraction, and is a widely followed indicator of future GDP trends.
UK Company News
Consumer discretionary bellwether Next said they were slightly ahead of its expectations in Q3. The company is maintaining guidance for full-year profit, consolidating its place as the UK’s best-performing clothing retailer over recent years.
GSK updated positively with beats across the board. The company is raising FY22 Guidance by c2%.
Contractor Morgan Sindall described a more challenging economic backdrop, balanced by the reassurance of a very secure balance sheet and a secure workload. John Morgan, CEO and founder, is an 8% shareholder and continues to navigate a balanced course through this challenging industry with capital preservation at the front of his mind.
Cyber security and software services provider NCC reported on double-digit constant currency revenue growth in its Global Assurance division. This growth is accelerating as the year progresses. Software Resilience saw a low single-digit FX decline due to a recent sales reorganisation, which has stabilised and now improving net beneficiary of the strong dollar given the scale of its activities in the USA. Management expectations for the full year are unchanged.
Metro Bank ruled out capital raises or asset disposals with a positive update. The lender said that “minimum regulatory capital requirements are expected to be met without needing to take any market-dependent balance sheet action.”
Industrial pump manufacturer Weir said that supply chain issues have been easing. Input costs are being mitigated, and global mining demand has been strong in the quarter, highlighting South American copper demand. They are guiding inline for the FY.
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