Markets show signs of jitters on news of potential US tightening
- S&P 500 closed down 1.26%, with the Nasdaq falling 2.26%, on prospect of “quantitive tightening” coming from the Fed
- FTSE100 – down very slightly as it responds to negative sentiment from across the Atlantic
- Hilton Food Group – the meat and fish supply specialist sees revenue and profit rise, but falls short of analyst expectations
- Following days of heightened volatility oil traded higher to $107
Sophie Lund-Yates, Lead Equity Analyst at Hargreaves Lansdown:
With the war in Ukraine ongoing and huge uncertainty surrounding further Russian sanctions swirling, the US markets closed down rather significantly yesterday – especially growth heavy stocks. This comes as new comments from the powers that be have hinted that the Fed may be about to step up how aggressively it plans to combat soaring inflation. The rising of interest rates at the same time as shrinking the balance sheet is a possible scenario, and that injected jitters into markets.
The UK market has taken its lead from the US, with negative trans-Atlantic sentiment leading the FTSE100 down very slightly on open, although this hasn’t been as stark as was possible. Further ups and downs are to be expected, with all eyes on the Federal Reserve’s next move. Looking beyond policies, the wider macro picture is also being rocked by the ongoing situation in Ukraine. With allegations ramping up and new western sanctions against Russia in the pipeline, further Russian economic retaliation looks inevitable. These concerns have no doubt fed into the oil price trending higher, with volatility expected to continue as the geopolitical situation unfolds in the coming weeks and months.
Supply chain issues are also unlikely to be smoothed out any time soon, with Ukrainian commodities in the spotlight. These issues are of course also being compounded by China’s lockdowns, which is causing delays for firms around the globe. This is doing little to ease the inflation issues the world is already grappling with. On a stock level, this is going to have the biggest ramifications for some FMCG companies, as well as industrials that rely on Chinese manufacturing.
Looking to specific companies, UK based Hilton Food Group – a meat and fish supply giant has managed to record full year underlying operating profit of £73.6m, up 12.7% on last year. The group’s been expanding into new protein products and categories to bolster growth, but warned of a more challenging environment, with global uncertainties impacting supply chains and inflation. Still, being a supplier of core food groups is a more enviable place to be in a world of rising inflation, than those that count their products as discretionary. Despite the strengths, the shares fell over 1% in early trading, as results missed analyst expectations.”
