The prospect of rising US interest rates led to a big sell off in global markets on Thursday including the FTSE 100. By the close the index of leading UK shares was down 1.22% to 7,418.34.
There’s a quiet start to the week’s proceedings with Americans enjoying their Columbus Day bank holiday on Monday (8 October). A big release comes in the middle of the week with monthly UK GDP figures on Wednesday (10 October) (see Economic update). Next Thursday (11 October) US inflation numbers are out. Interest rate expectations across the pond have been creeping up and have been reflected in rising yields on US government debt. A higher-than-expected inflation reading could lead to speculation of more rapid rate increases from the US Federal Reserve. Earlier the same day the Bank of England’s quarterly credit conditions survey is published. This will include detailed data on levels of secured and unsecured lending to households and businesses in the UK.
Airlines were in focus for investors this week after a big profit warning from Ryanair (RYA) on Monday (1 October). Low-cost carrier Ryanair lowered its full-year adjusted profit forecast, citing lower traffic and forward bookings due to a series of strikes by its crews. The company said it now expects profit for the year to range between €1.1 billion and €1.2 billion, which compares with a prior forecast of €1.25 billion to €1.35 billion. Shares in rival airlines British Airways-owner International Consolidated Airlines (IAG) and EasyJet (EZJ) also saw their share prices come under pressure on the news.
The following day on Tuesday (2 October) Ryanair reported that passenger volumes grew 11% in September, though strike action caused the cancellation of 400 flights during the month. Monthly passenger numbers rose to 11.8 million. Its load factor ((the number of bums on seats relative to the number of seats available) remained steady at 97%. On Thursday (4 October) EasyJet posted its own September traffic numbers up 14.2% to 8.8 million passengers compared with 7.7 million in the same month last year although less encouragingly the load factor dipped slightly.
Buoyed by the World Cup and record summer temperatures the UK economy enjoyed its strongest growth in a year in the three months to July at 0.6%, against consensus expectations for growth of 0.5%. With a crunch summit on Brexit coming up, the market will be watching if that positive trend is being maintained when the latest UK GDP figures are published on Wednesday (10 October).
Oil prices hit a four-year high earlier this week which should boost profit in the energy sector. Investors can gain exposure through iShares S&P 500 Energy Sector (IESU) for an ongoing charge of 0.15
11 October – Price comparison site Moneysupermarket.com (MONY) scheduled update on third quarter trading is likely to see two issues in focus other than the numbers themselves. One is an update on a plan to launch a joint venture to disrupt the mortgage market by offering comparison services. The other is a potential disruptive threat amid reports Amazon is considering launching its own comparison product in the insurance space.
12 October – This first quarter update from specialist emerging markets asset manager Ashmore (ASHM) should offer some insight into current investor sentiment towards this part of the market. Key figures to look for will be assets under management and the net inflows or outflows out of its roster of funds. The company recently announced plans to open a new office in Dublin as part of its contingency planning for Brexit.
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