- Markets are uncertain in anticipation of the US Presidential election result.
- UK looking flat with retail sales disappointing.
- Vodafone/Three UK deal offered some hope.
- Primark owner ABF rounds off a mixed year.
- More uncertainty for the FCA’s motor finance investigation.
- Brent oil holds steady around $75.
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“There is a ‘wait and see mood’ on the markets as uncertainty weighs about the outcome of what appears to be a deadlocked US Presidential election. Campaigning is converging on the crucial swing state of Pennsylvania and the extent to which voters can be galvanised to join queues at polling booths could make all the difference. The dollar has been fluctuating but is still lower on the week, as Kamala Harris’ chances have appeared to have improved. A pro-tariff Trump presidency could see the dollar strengthen amid concerns higher inflation will prompt the Fed to keep interest rates higher. There is likely to a period of volatility particularly if the result is contested, but investors should keep their eyes on long-term horizons as historically financial markets have risen over the course of both Democratic and Republican presidencies.
Investors in UK assets are continuing to assess the impacts of last week’s Budget and a disappointing snapshot of the high street. The British Retail Consortium figures for October were underwhelming, with headline sales up 0.6%, marking a sharp decline from the 1.7% growth seen in September. Retail investors will be particularly interested in comments that fashion sales were impacted by mild weather delaying winter clothing sales, especially after recent results from Next suggested quite the opposite.
Primark owner ABF has reported decent results broadly in line with market expectations. It’s not been plain sailing over 2024; the sugar business is in trouble and not expected to recover for at least another year, and core Primark sales are slow at best. The margin recovery is commendable, though, and when you add in good free cash numbers, a fresh £500mn buyback, and a larger-than-expected dividend, there should be enough to keep investors happy today.
The Competition and Markets Authority (CMA) has released a statement suggesting that Vodafone and Three UK have a pathway to complete their deal. The full report is out this afternoon, but the initial read from this morning’s press release is positive. The next question is how many of Vodafone’s proposed remedies have been accepted and how far the CMA is looking to push terms that require preferable pricing to be offered to smaller rivals.
In a further blow to lenders caught up in the FCA’s motor finance investigation, reports surfaced that the Court of Appeals believes there are few grounds for an appeal to the recent court decision that sided with the claimants. The timeline and quantity of any remedy are still unknown, and this continues to drag on those lenders involved, Lloyds in particular.
Brent Crude oil held steady just below $75 per barrel in early trading, with markets closely watching the U.S. presidential election, which is expected to be a tight race. Investors are also anticipating the upcoming Federal Reserve decision and potential economic stimulus from China to assess demand from major consumers. Oil prices had jumped nearly 3% on Monday after OPEC+ delayed a planned output increase, with additional pressure from rising geopolitical tensions involving reports of potential attacks from Iran on Israel, sparking worries about oil supply disruptions.”
