Today's Markets: Demob happy - traders ready for a break

The latest from world markets and in companies news

November 23, 2022

Markets becalmed ahead of Thanksgiving holiday in the US
Plenty of economic data to chew over
Russia threatens to curtail gas supplies to Europe

A heavy day for economic data is congested ahead of the Thursday shutdown of the US market. Durable goods, flash services and manufacturing PMIs, new home sales and University of Michigan consumer sentiment and inflation expectations data is all on the deck. German PMI data this morning showed improvement from October but still indicate contraction in Europe’s largest economy.

FOMC meeting minutes later will be closely watched for signals about where the terminal rate is going to sit. Cleveland Fed president Loretta Mester reiterated that controlling inflation was the number one goal but also that the Fed could slow the pace of hikes. Esther George of the Kansas Fed said they might need to take interest rates higher and hold them there for longer to bring down inflation, given the amount of excess savings in households.

Natural gas is up strongly for a third straight day after Russia said it could curtail supplies to Europe. G7 says it will announce price cap level soon.

UK Supreme Court to rule on Scottish independence vote... Sterling could be susceptible to a downside kneejerk should the court back the pro-independence side.

Covid situation in China still slightly risk-off. IMF warns that China growth risks are to the downside as it sticks with its zero covid strategy.

Mixed start to European trading: London made further headway, with the FTSE 100 coming up just shy of 7,500, whilst shares in Frankfurt and Paris pulled back a touch. Oil and gas + basic resources again doing the lifting sector wise.

The Euro Stoxx 50 index was flat after closing at its highest since April. US shares rallied on Tuesday heading into the Thanksgiving holiday, with the S&P 500 up over 1.3 per cent towards the top of the flag formation at 4,000. With the holiday-curtailed trading week it very much feels like it’s a case of getting the week done and dusted. Even if you’re not a yank, we could all do with a rest.

Companies

De La Rue downgrades profits…again

Shares in De La Rue (DLAR) dropped by 20 per cent this morning, after the banknote printer downgraded its profit forecasts for the third time this year.

In its interim results, the group said adjusted operating profit for 2023 was likely to come in at between £30mn and £33mn. It had previously said profit would be around £36.4mn - in line with 2022.

A host of exceptional charges meant the group reported a statutory operating loss of £12.6mn for the six months to 24 September, compared with an operating profit of £13.8mn this time last year. Revenue from the biggest division - currency - is down by 12 per cent, while the authentication arm only grew sales by 3 per cent.

Adding to the pressure is activist shareholder Crystal Amber (CRS), which is calling for the replacement of De La Rue chair Kevin Loosemore. JS

North Sea regulator launches flaring case

An unnamed North Sea operator is under investigation for flaring and venting by the North Sea Transition Authority (NSTA), which is responsible for permitting. The NSTA did not name the company but said the investigation “could result in action being taken, including a fine for the company or up to the relevant licence being taken away”.

The regulator has toughened rules around venting (the release of natural gas into the atmosphere) and flaring (burning the gas), to the point where Hurricane Energy (HUR) cancelled a new well programme this year because it could not agree permit conditions with the NSTA. AH

Yet another investigation finds appalling Boohoo standards

After repeating for years that it has stopped treating its workers terribly - and enforcing higher standards at contractors - Boohoo (BOO) has been subject of another exposé showing conditions are still below par.

The Times put an undercover reporter into a Boohoo warehouse in Lancashire, who said he would walk 13 miles in a shift in temperatures at times over 30 degrees, all the while monitored with a device strapped to his wrist. Boohoo told the newspaper its highest priority was “making sure our people are safe and comfortable in their workplace”. In 2018, the FT reported Boohoo suppliers were paying £5 an hour to workers “as a top wage”, The Times and BBC have also investigated worker pay and conditions in Leicester.

Boohoo’s shares were off 2 per cent in morning trading. It is down 68 per cent this year, to 38p a share.

Neil Wilson is the Chief Market Analyst at Finalto