Global financial markets were under big pressure on Thursday (11 October) as investors capitulated in the face of several risk factors, including rising interest rates in the US. By the close, the FTSE 100 was down nearly 2%, just above the psychologically significant 7,000 level.
Next Monday (15 October) monthly US retail sales are released. This may offer some insight into the pace of interest rate hikes – a key factor behind the recent market volatility. On Tuesday (16 October) UK average earnings data is out. Compiled by the Office for National Statistics it will compare the three months to the end of August with the same period a year ago.
Next Wednesday (17 October) investors can digest the latest UK inflation figures and minutes from the latest meeting of the US Federal Reserve which again will likely help illuminate the hot button market issue of US rates. Next Thursday (18 October) sees the release of the UK retail sales numbers for September and the conclusion of a key EU summit on Brexit (see Economic update). In the early hours of Friday (19 October) Chinese growth figures are published.
Amid the market volatility, the recruitment sector was in focus this week as three of its main constituents updated the market. Recruiters often struggle in weak economic conditions as companies stop hiring and individuals do not feel sufficiently confident to move jobs or seek new opportunities. Perhaps this explains why shares in Hays (HAS) fell heavily on Thursday (11 October). Group net fees, a key metric for recruitment companies, were up 9% on a like-for-like basis in the first quarter against a run-rate of 10%-plus over the previous four quarters.
The slowdown was due to a moderation in growth in continental Europe during the second half of September which saw fewer jobs being filled. Results on Wednesday (10 October) from rival PageGroup (PAGE) got a better reception as it reported an acceleration in net fee income in the third quarter and saw full-year operating profits slightly ahead of consensus. On Tuesday (9 October) professional recruiter Robert Walters (RWA) registered a second consecutive quarter of record net fee income of more than £100m. Growth was solid again in the third quarter, especially in Asia Pacific up 18% compared with 8% in the first half of the year.
Next Thursday (18 October) an EU summit with the aim of hammering out an agreement over the UK’s exit from the EU is set to conclude. This is so there is sufficient time for both the UK and European parliaments to ratify any deal ahead of the UK’s scheduled exit on 29 March 2019. If an agreement is secured, then sterling may strengthen but if talks remain at an impasse the pound could slump as investors would get increasingly nervous ahead of a possible emergency meeting in November.
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17 October – Investors will be looking for insight into how online fashion business ASOS (ASC:AIM) can bounce back from a tricky year when it reports full-year results. The shares took a hammering in April when the company revealed it would need to drastically step up spending on logistics and distribution to support its global growth plans.
17 October – This third-quarter update from Rentokil (RTO) is likely to see investors keen to hear if the pest control company’s strategy of pursuing a mix of steady if undramatic organic growth and opportunistic bolt-on acquisitions are continuing to pay off. The company recently announced the acquisition of Mitie’s (MTO) pest control business.
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