Market Report – US stocks rally on the first day of Q4
- S&P 500 closed 2.6% higher, with the NASDAQ up 2.3%
- Brent oil jumps 4% to $89
- Sterling strengthens after tax cut reversal
- Greggs keeps full year targets intact
Matt Britzman, Equity Analyst at Hargreaves Lansdown
“US markets finally got something to cheer about in the first session of the fourth quarter. Both the S&P 500 and NASDAQ posted their biggest daily increases since August as US Treasury yields pulled back 0.18 percentage points. Asia followed suit and European markets look set to open higher too, the upbeat trading coming as the UK government scrap plans to reduce tax on the UK’s highest earners. Whilst rallies in most global indices is certainly a welcome reprieve, underlying issues very much remain.
Brent oil trades close to $89 a barrel this morning following a 4% jump yesterday, as prices remain supported ahead of the upcoming OPEC+ meeting where markets are anticipating a big cut to supply – in the region of 1 million barrels per day. The international oil benchmark declined for the fourth straight month as aggressive interest rate hikes, aimed at curbing inflation, increase recession risk and a surging US dollar makes the black stuff more expensive for overseas buyers. That’s unwelcome news for drivers, who’ve been battling higher prices at the pumps this year given any props in oil prices could reverse the welcome fall in fuel prices seen in recent weeks.
Sterling strengthened on Monday as the UK government agreed to abandon the plan to axe the top rate of tax, pushing back to $1.13 vs the US dollar. However, this mini reversal is likely to be short-lived in its nature as sterling remains under significant pressure in the face of a looming recession and a US Fed that looks likely to continue aggressive rate rises.
In company news, Greggs saw total sales up 14.6% in the third quarter as a muted August was followed up by returning momentum in September. The Autumn menu’s up and running with fan favourites like the pumpkin spiced latte and chicken & stuffing baguette up for grab which should help boost demand. Inflation continues to linger, with costs on track to rise 9% over the year though some decent hedging means full year performance is expected in line with previous guidance.”
