Proactive Investors -
- FTSE 100 up 7 points at 7,660
- Kingfisher (LON:KGF) slips on profit warning
- Ocado (LON:OCDO) rises on upbeat Ocado Retail trading
Futures point to a firm start in New York
US futures pushed higher ahead of the open on Wall Street, after a sluggish session on Monday, as investors await the Federal Reserve’s interest rate decision and guidance on the future path of monetary policy.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.2% higher, while those for the S&P 500 rose 0.2%, and contracts for the Nasdaq 100 futures were up 0.2%.
Kit Juckes at Societe Generale (EPA:SOGN) said: “The market doesn’t expect a Fed hike but the dot-plot, which currently suggests there will be one more this year before a steady fall, thereafter, could see cuts pushed further out, while the tone of the statement is certain to be hawkish, as the FOMC reinforces the ‘higher for longer’ message.”
Shares of online grocery delivery company Instacart will begin trading, five days after Arm’s blockbuster debut signalled a warming market for new US listings.
The shares will list at $30, the top end of the range it gave investors last week.
Back in London, and at midday the FTSE 100 is holding in positive territory, but it's marginal, now up 7 points at 7,660.
UK set to see highest inflation in G7 - OECD
The UK economy is set to witness the highest inflation rate of the world's G7 advanced economies this year, according to new forecasts.
The Organisation for Economic Co-operation & Development also increased its predicted average UK inflation rate for 2023 compared with its previous estimate.
Economists at the globally recognised organisation also reduced their UK growth forecast slightly for next year amid pressure from higher interest rates.
The OECD expects UK inflation of 7.2% for 2023, increasing its previous forecast of 6.9% from June, this would be the fastest rate across the G7 and third fastest across the G20.
New OECD interim forecasts out this morning…All economies hit by rising rates, Germany into reverse this year, UK slow growth this year (0.3%) & next (0.8%)
UK - highest G7 inflation this year (7.2%) & highest core inflation in G7 for both 23 & 24https://t.co/AJjQuBYWrm
— Faisal Islam (@faisalislam) September 19, 2023
The OECD said inflation across the G20 is expected to be 6% for 2023, down 0.1 percentage point on its previous forecast, and 4.8% in 2024, up 0.1 percentage point.
It said there is a risk inflation could reduce quicker than expected, with the body highlighting the impact of interest rate hikes on consumer spending and slower activity in China.
Meanwhile, the report held its forecast of UK growth in 2023 at 0.3% for the year. This is predicted to be the second weakest among the G7 and third weakest among the G20.
The OECD also predicted that UK GDP will grow by 0.8% next year.
Time to check-in to IHG says Bank of America
Bank of America (NYSE:BAC) has given Intercontinental Hotels Group PLC (LON:IHG) a boost reinstating coverage with a buy rating and 7,200p price target, implying 18% potential return.
It describes IHG as a quality business (asset-light, geographically diversified), but notes its EV/Ebitda multiple discount to US peers has expanded to 14% - wider than historically.
BofA finds this unjustified given its high returns (>30% ROIC), earnings growth (11% 2023-27E) and cash return potential.
“We think system growth concerns are overblown and strong RevPAR should be sustainable amid resilient travel demand,” it said in a research note.
It also believes around 26% of market cap could be returned over the next three years in dividends and share buybacks, given the strong free cash flow.
BofA is bullish on the European hotels sector, rating Accor (EPA:ACCP) buy with Whitbread (LON:WTB) given a neutral rating.
“We believe now is a good time to gain exposure to companies with geographically diversified hotel portfolios, strong balance sheets and cash generative asset-light models, with attractive and improving cash return to shareholders,” the bank said.
Shares in IHG are up 1% at 6,286p while Whitbread is 0.4% higher at 3.642p.
In Paris, shares in Accor rose 1.1% to €34.36.
Eurozone inflation falls faster than expected
Inflation in the eurozone fell faster than expected last month.
Consumer prices across the single currency area rose by 5.2% in the year to August, down from 5.3% in July, and lower than the 5.3% initially estimated for August.
The highest annual rates were recorded in Hungary (14.2%), Czechia (10.1%) and Slovakia (9.6%), while the lowest annual rates were registered in Denmark (2.3%), Spain and Belgium (both 2.4%).
Euro area annual #inflation at 5.2% in August 2023, down from 5.3% in July https://t.co/Zk9TgHmKhd pic.twitter.com/k06nSdcWVL— EU_Eurostat (@EU_Eurostat) September 19, 2023
Compared with July, annual inflation fell in fifteen member states, remained stable in one and rose in eleven.
But this still leaves inflation well over the European Central Bank’s inflation target of 2%.
Food, alcohol & tobacco prices were 9.7% higher than a year ago, down from 10.8% in the year to July.
Services inflation dipped to 5.5% from 5.6%, while industrial goods inflation dropped to 4.7% from 5%
Energy prices continued to pull inflation lower; they were 3.3% lower than a year ago.
Berenberg puts faith in TrustPilot
Shares in Trustpilot Group PLC (LON:TRST) is another winner today with shares soaring 15% after first-half results.
Analysts at Berenberg have increased financial year 2023 adjusted Ebitda forecasts by a whopping 34% after management said this figure would exceed market expectations.
“We think that this upgrade is impressive considering the tough macro backdrop, and it highlights Trustpilot’s resilience and the operational leverage inherent in its business model as it continues to scale,” the broker said.
Berenberg highlighted an acceleration in North American bookings and progress on pricing initiatives.
The broker has a buy rating on the firm with a 160p price target.
It thinks one of Trustpilot’s key competitive advantages is the consumer engagement in the platform, noting total cumulative reviews were up 25% year-on-year, while claimed domains were up 23% and TrustBox impressions were up 15%.