- Wall Street and Asian markets looking positive
- Futures markets are indicating gains of up to 0.5% for UK and Europe
- HSBC sinks despite higher earnings
- Bonds recover some of their poise following Sunak appointment
- Premier Inn hit be rising costs
- AstraZeneca drug trial ends with a miss
Steve Clayton, fund manager at HL Select:
“Wall Street enjoyed a positive session overnight and Asian markets have followed on with broadly positive moves, including China which has steadied after a dramatic session on Monday. Futures markets are indicating gains of up to 0.5% for UK and European stocks this morning, but a lot can change in a trading session.
Today the markets will decide whether the relief and euphoria that greeted the announcement that Rishi Sunak’s bid for the premiership would be unopposed was merited or not. Yesterday, after the announcement at 2pm bond markets saw yields tumble, in sharp contrast to their moves in reaction to the mini-budget a few short weeks ago. Yields on longer-dated bonds have fallen to around 3.75%, which if sustained ought to offer some hope that mortgage rates may soon start to ease.
Sterling too has recovered from the shock of the mini-budget and today stands at $1.13, the same level as it was when Kwasi Kwarteng stood up to read his speech in the Commons.
News fresh out this morning is led by HSBC’s announcement of forecast-beating Q3 earnings. The Asian-focused banking giant grew its adjusted pre-tax profits by 18% to $6.5bn, boosted by the highest level of net interest income in many years. Far from delighting in the news though, the market has reacted by pushing the shares down by 4%. Investors were unsettled by an unexpected announcement of a change of CFO and a cautious outlook for 2023.
AstraZeneca’s Fasrena drug has ended a Phase III trial targeting a rare inflammatory esophagus disease after it failed to meet one of its primary endpoints. Although the drug appeared to make a significant impact on the progression of the disease, it did not improve the symptoms experienced by patients, which included difficult with swallowing, food getting stuck and anxiety.
Whitbread, owner of the Premier Inn hotel chain, reported strong revenue growth in their half-year results, but the shares are weaker in early trading because the group has warned that cost inflation is proving more persistent. Revenues more than doubled versus the pandemic-impacted prior year and were 25% ahead of the 2020 comparator. Returning to the payment of interim dividends after dropping them during the Covid period, Whitbread is paying 24.4p per share, three quarters of the pre-pandemic run rate.”
