Today's Markets: Inflation, supply chain and pig problems

Pig problems for the listed animal health sector

The UK’s labour shortage, which has already had a profound effect on fuel supply, has started to impact the nation’s farmers. Just over 600 healthy pigs have been killed by their farmers due to a shortage in abattoir workers. The sector has also struggled with rising gas prices which has led to a carbon dioxide shortage - abattoirs use CO2 to stun animals before slaughter. Fears are mounting that a mass cull of healthy pigs which therefore can’t enter the food chain could cause a pork shortage in the UK in the lead up to Christmas. Many small farms might not survive the challenges. 

In the listed companies space, negative pig headlines are hurting the share price of Genus (GNS), Cranswick (CWK) and Eco Animal Health (EAH). All three companies provide products and services somewhere along the pork supply chain (Genus and Eco in the growth of the animals, Cranswick in the finished product) so the outlook for their UK operations has been dampened by the challenges currently facing farmers. 

Samsung reports record profit growth 

There has never been a better time to sell consumer electronics. With many workforces still operating partly from home, sales at Samsung rose 9 per cent to a high of Won73tn between July and September. Company management expect this to translate into a record operating profit of Won15.8tn, up 28 per cent from Won12.3tn a year earlier. 

But Samsung executives have also warned that a slowdown in home working will stunt the rate of growth in the coming months. There are also concerns that the semiconductor industry might be set to fall into a prolonged downcycle following the chip shortage and price surge this year. Samsung’s share price has fallen 20 per cent from its January highs. 

BoE warns of long-lasting inflation 

Huw Pill, the new chief economist at the Bank of England has warned that inflation is likely to be a more persistent problem than previously expected. “In my view, that balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long-lasting than originally anticipated,” he said in his first public remarks since taking office last month. His comments suggest that the BoE could be in favour of an early hike of interest rates when the vote is taken next month. 

Read more about the causes and considerations of prolonged inflation in this week’s cover feature. 

Prepare for the week ahead 

Company financial results are still trickling through. Next week investors at Asos (ASC) should be braced for final results which could reflect the same challenges faced by rival Boohoo (BOO) which were announced earlier this week. The company said that the re-opening of physical stores had had a negative impact on sales growth, while profits were hampered by ongoing supply chain issues. 

Next week will also see the release of a trading update from gambling giant Entain. Will management address the furlough payment question which Investors Chronicle writers posed earlier this week?

For a full list of next week’s corporate announcements read our week ahead page here.