- FTSE 100 in good spirits, set to open higher
- Nestlé falls short in Q3
- TSMC delivers confident guidance – positive for the AI trade
- Banks and Utilities lead the way for US markets
- Falling US crude inventories offer a small amount of support
- Entain on the front foot
Matt Britzman, senior equity analyst, Hargreaves Lansdown:
“FTSE 100 futures point to a small move higher at the open, after the index posted its highest level in six weeks yesterday. UK markets have a bit of wind in their sales after inflation data came in better than expected, increasing the odds of another couple of rate cuts this year.
Third-quarter sales have failed to deliver for food and beverage giant Nestlé. The positive news is that volumes are still growing after a period of decline when prices had to be jacked up to help offset inflated costs. With that period in the rearview mirror, the focus is back on growing the underlying business – but that’s where the difficulty lies. A soft consumer environment means guidance has been cut, and with commentary from management not giving a whole lot away as to how it expects to reignite growth, there’ll be plenty of questions for the team on this morning’s call.
Chip manufacturing giant TSMC has delivered a confident tone as guidance for the fourth quarter comes in well ahead of expectations, in stark contrast to what markets saw from ASML earlier in the week. Despite ASML being adamant that AI demand was still strong, some in the market were having trouble believing it and the big AI plays saw weakness as a result. TSMC’s confidence should be taken as a positive read for the entire AI trade, especially Nvidia.
US markets staged a mini recovery yesterday evening after posting its third worst down day of the past six weeks on Tuesday. Earnings season is now underway, and the US Banks are out the blocks firing on all cylinders, raising hopes that the mythical soft landing can be achieved. Utilities also had a strong day thanks to the renewed focus from the mega-cap tech cohort on nuclear power as they gear up for the mammoth energy loads needed to run their massive data centres.
Brent crude prices are bouncing around $74 per barrel in early trading after a four-day slump, with some support offered by a surprising drop in US crude inventories. The American Petroleum Institute reported a 1.6mn barrel decrease in crude stockpiles, which caught markets off guard since an increase had been expected. Gasoline and distillate supply also dipped, giving prices a further lift, along with rising Middle East tensions after Israeli airstrikes on Lebanon.”
Derren Nathan, head of equity research, Hargreaves Lansdown:
“Ladbrokes owner Entain’s new CEO Gavin Isaacs is certainly going out on the front foot after just over a month in the job. After the hints dropped in September’s strategy update, it’s no huge surprise to get an upgrade, albeit a small one, in today’s review of the third quarter. That’s been helped by underlying online Net Gaming Revenue improving by 9% which included a sooner-than-expected return to growth in the UK & Ireland.
But domestic high street betting shops are still in decline, however, with NGR dropping 2%. Growth in the US JV BetMGM was 18% with signs of stabilising market share in a competitive space. But at 48%, Brazil was the standout performance and this a key territory to watch as the industry continues to come under the samba nation’s regulatory umbrella. But at 48%, Brazil was the standout performance and this a key territory to watch as the industry continues to come under the SaMBA nation’s regulatory umbrella. Investors certainly seem to be backing Isaacs’ technology-first approach. For now, the core markets are holding up well and there are some attractive growth opportunities in train, but there is some pressure to keep delivering no matter what way the odds are stacked.”
