Market Report: S&P 500 posts another all-time high, UK shoppers go bargain hunting
Matt Britzman, senior equity analyst, Hargreaves Lansdown: “The FTSE 100 is set to open higher this morning, with futures trading up 0.44%, as investors digest the latest set of numbers from the BRC-Nielsen Shop Price Index and take cues from the US and China. Stocks in China rallied on Monday off the back of the central bank’s bumper stimulus plans and posted their best day since the 2008 financial crisis. The debate will soon move to whether this is a sustainable run. Monetary stimulus provides a welcome tailwind but will need to be married with other changes if this sentiment shift is to have legs.
Greggs is one of those names you can just depend on to deliver the goods these days, and this morning’s trading update didn’t disappoint. Top-line growth is slowing, largely due to tougher comparable periods from last year, but it was good to hear the cost picture is coming in toward the low end of the guided range, meaning less pressure on margins. Credit where it’s due, management has been on point with execution. Menu tweaks, a focus on the evening market, new delivery options, and a push for penetration on the app have all worked together to deliver ongoing outperformance.
UK shoppers were treated to bargains galore in September as the BRC-Nielsen Shop Price Index shows that overall prices were 0.6% lower than a year ago, the largest drop since 2021. Non-food items were 2.1% lower than last year as retailers ramped up offers and discounts to help bring customers through the doors. While that’s good news for weekend shoppers, retailers will feel the effects of increased promotion on their margins and bottom lines. Best-in-class names like Next, which is managing to increase full-priced sales despite the backdrop, will likely take this as an opportunity to extend their lead at the front of the pack.
The S&P 500 notched yet another all-time high in a volatile trading session that saw a last-gasp jump for the line push the index higher. Markets were a little spooked in early trading after Fed chair Jay Powell said that the committee was in no hurry to cut rates further, opting to react to the data instead of committing to a pre-determined path. Nevertheless, the strong finish helped mark the first positive return for the index over September since 2019.
Tesla delivery numbers should be out today, and while vehicle deliveries will grab headlines, investors would be wiser to focus on the energy deployment figures. There’s so much vehicle data across China, the US, and Europe that analysts already have a pretty good idea of where Tesla will land. The expectation is that a strong quarter from China, along with the benefit of the refreshed Model 3 and Cybertruck, will help drive a return to growth despite the global auto market struggling to gain traction. 465,000 deliveries are what the market expects, but there isn’t a huge earnings impact if numbers come in a little higher or lower. There is however a major impact from the high-margin energy business, and this is where the focus should be. Deployments can be clunky quarter on quarter, but we should see another giant leap from last year’s numbers.
Brent oil futures are hovering around $71.8 per barrel, supported by ongoing tensions in the Middle East and the fear that Iran, a major oil producer, might be drawn more directly into the conflict. Traders will be paying close attention to data from China, trying to assess whether new stimulus is enough to kick start activity.”
The author holds shares in Tesla
