The US Federal Reserve’s commitment to hiking interest rates remains a sore point for global stocks and the FTSE 100 was caught up in the weakness on Thursday. By the close the index of leading UK shares was down 0.39% at 7026.99.
The next seven days look quiet after the attention on the EU summit this week. On Wednesday (24 October) a series of purchasing managers’ index surveys are out, covering the manufacturing and services sectors in the Eurozone. Next Thursday (25 October) the European Central Bank (ECB) is scheduled to deliver its latest update on financial stimulus. Investors may be watching to see if the prospect of a no-deal Brexit might affect the ECB’s resolve to end its quantitative easing programme in December this year. On Friday (25 October) the first estimate of US economic growth for the third quarter is released (see Economic update).
The housebuilding sector found the spotlight on Wednesday. Barratt Developments (BDEV) reported it had made 'strong' start to the new fiscal year as housing demand remained robust supported by attractive mortgages and positive government policy. Some key metrics softened. For the period from 1 July to 14 October, net private reservations per active outlet averaged 0.72 per week, down from 0.74 for the same period a year earlier.
The company launched 53 new developments, including a joint venture, for the period, down from 62 a year earlier, and was operating from an average of 365 active outlets, down from 371. The housebuilder's forward sales were up by 12.4% to £3.15 billion. Rival Crest Nicholson (CRST) cut its profit guidance for the full year blaming lower margins owing to rising costs and subdued sales as homebuyers shunned higher priced homes in the South East and London. The company said it now expects that full-year pre-tax profit will be in the range of £170 million to £190 million.
Next Friday (26 October) the first official estimate of US GDP for the third quarter of 2018 is published. This follows the news the American economy has been flagged as the most competitive survey in the latest annual ranking by the World Economic Forum. The first time it has topped the list since the global financial crisis. A strong showing for the economy could have an impact on market confidence and might also have a bearing on the looming mid-term elections across the Atlantic.
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24 October – Third-quarter numbers from Barclays (BARC) will set the tone for a series of updates from the wider banking sector. Barclays like its rivals looks set to have several items in focus, net interest margins should give insight into levels of profitability and any impact from a highly competitive mortgage market. There is also likely to be attention given to loan growth as well as loan loss and impairment charges.
25 October – New chief executive Mark Read, whose appointment was confirmed in September, has a big job on his hands at global advertising firm WPP (WPP). The company issued a number of warnings about growth last year and saw the departure of its founder and long-standing boss Martin Sorrell. In the first, half WPP reported a headline profit before tax £735m, down 7.4%, or 2.5% lower at constant currencies. Investors will hope for an improvement in those trends in its third-quarter trading update.
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