- FTSE 100 opens higher
- Halma keeps ticking along
- Diageo faces challenges, but no changes to guidance
- US markets lose a little enthusiasm
- Meta unveils some new toys
- Brent oil tumbles
- Mitchell’s & Butlers gives a confident outlook
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“The FTSE 100 has opened 0.65% higher this morning as investors digest a string of trading updates and try to assess the global economic outlook in light of China’s major stimulus package. One eye will also be on tomorrow’s US PCE numbers, the Fed’s preferred measure of inflation, which will be key for gauging the interest rate path across the pond which has global impacts.
Safety conglomerate Halma spoke of varied conditions across its many end markets in a trading update this morning but still expects strong cash generation and improving margins. The strong run-up in Sterling is set to continue acting as a headwind, but stripping currency impacts out, top-line growth is expected in line with comments earlier in the year. The acquisition pipeline looks to be healthy too, which is key for Halma given how well-placed it is to capitalise on fragmented end markets.
Drinks giant Diageo highlighted ongoing challenges in the global market but kept its full-year outlook unchanged, providing some relief to investors given the general consensus among analysts was that organic sales growth would be lower. While the US spirits market remains subdued, Diageo remains cautiously optimistic about growth resuming once the consumer environment improves. With Thanksgiving in a couple of months, followed by Christmas, the end to 2024 is going to be key for the owner of Guinness and Johnnie Walker.
US markets lost some enthusiasm yesterday, with the S&P 500 down 0.19% after posting its 41st record high of the year on Tuesday evening. Meta saw a small tick higher after Mark Zuckerberg treated investors to some new toys during his keynote speech at Connect. The standout from an innovation standpoint was the Orion augmented reality glasses. Though by no means a refined product, and still years away from a launch, Meta looks to be leading the race to find the next big form factor for digital integration. This area used to be Apple’s bread and butter, but aside from a clunky VR headset that no one really wants, hardware innovation has been disappointing of late.
Brent oil futures have dropped over 3% this morning to $71 on rumours that the Saudis are ready to abandon an unofficial price target of $100 per barrel. The rumours suggest an unwinding of the voluntary production cuts starting in December, and with demand conditions sketchy at best, that would risk putting the market into oversupply.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Pub Group Mitchell’s & Butlers remains confident of full-year results at the upper end of expectations. That’s despite a slowdown in like-for-like sales growth in the fourth quarter, driven by easing inflation and poor. Inflation is a double-edged sword and on the plus side that’s seen net cost headwinds reduce by £55mn in the year about to end. The Group has been consistently outperforming the market and it’s not taking its eye off the ball, continuing to prioritise investment in the estate when it comes to the use of cash. With 50 pubs a month closing in the first half of 2024 in England and Wales, solid operators like Mitchells & Butlers are well placed to keep mopping up market share.”
