UK inflation remains more than three times above the BOE target
UK inflation was unchanged at 6.7% in September, matching August's reading and dashing hopes of another fall.
UK inflation was unchanged at 6.7% in September, matching August's reading and dashing hopes of another fall. The news that prices rose at the same pace last month halts months of progress towards easing the pressure on households. It leaves inflation over three times above the Bank of England's target of 2%. The rise in the price of oil is now expected to keep inflation high.
China's economy grew at a faster-than-expected pace in the third quarter. Gross domestic product grew 4.9% in July–September from the year earlier, beating analysts' expectations for a 4.4% increase. It was, however, slower than the 6.3% expansion in the second quarter. Beijing has in recent weeks unveiled a raft of measures, including more public works spending and interest rate cuts, and this latest data suggests that the Chinese government's growth target of around 5% in 2023 is likely to be achieved. Over the first nine months of the year, the economy expanded 5.2%.
China's consumption and industrial activity
China's consumption and industrial activity in September also surprised on the upside. Industrial output in September grew a stronger than expected 4.5% from a year earlier. Analysts had expected a 4.3% increase. Retail sales also beat expectations, rising 5.5% last month and accelerating from a 4.6% increase in August. Analysts had forecast retail sales to expand by 4.9%. The only cloud in the picture: fixed asset investment grew 3.1% in the first nine months of 2023 from the same period a year earlier, missing expectations for a 3.2% rise. It expanded by 3.2% in the January–August period.
Whitbread posted a 44% rise in interim profit, helped by strong demand and resilient spending at its pubs and restaurants. The Premier Inn owner says adjusted profit before tax rose to £391 million in H1 from £272 million a year earlier. It also announces a further share buyback of 300 million pounds.
2024 will be a transition year for ASML Holding, according to its CEO. The semiconductor equipment maker posted earnings of €1.9 billion in Q3. Analysts had forecast net profit at €1.81 billion. It is also an improvement on the €1.7 billion posted for the same quarter a year ago. The company reiterated its expectations for full-year sales growth of 30%. The semiconductor industry is currently working through the bottom of the cycle, according to ASML's CEO. Its customers expect the inflection point to be visible by the end of this year but are uncertain about the shape of the demand recovery.
Adidas raises its 2023 revenue forecast and cuts its expected loss for the year. Adidas now expects a full-year operating loss of around €100 million. It previously estimated that loss at €450 million. Adidas says third-quarter revenues grew by 1% in currency-neutral terms compared to the same period a year ago, while gross margin improved by 0.2 percentage points to 49.3%.
Excluding the cost of ending its partnership with Kanye West, Adidas said it now sees an underlying operating profit of €100 million. Adidas has been selling its remaining stock of the range since the end of May, helping narrow an expected loss. Just Eat Takeaway published an upbeat trading statement this morning. The group upgrades its Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) guidance to approximately €310 billion. It also raises its free cash flow guidance to break-even in H2 2023 and positive thereafter. It also launches a new share buyback programme of about 50 million.
United Airlines Holdings forecasts weaker fourth-quarter earnings due to higher costs. The announcement was made alongside its earnings report for the third quarter. Adjusted profit came in at $3.65 per share, higher than the street estimates of $3.41. Revenue also marginally beat expectations at $14.48 billion. Yet, the stock fell in extended trading as it now expects an adjusted profit of $1.50–$1.80 per share in the quarter through December, below the $2.06 expected by analysts. United Airlines says that the rise in fuel prices since July is pressuring profits at U.S. carriers. United has said its fuel costs have climbed over 20% since mid-July.
Tesla is due to report tonight after the market closes. The street forecast earnings of 74 cents are yet another contraction of the previous quarter, as Elon Musk's priority has been to focus on sales rather than profits since the beginning of the year.
Netflix is another stock expected to post its report for the first quarter tonight after the closing bell. The street sees earnings of $3.49 per share, to be compared with $3.10 last year. Revenue is also expected to rise to $8.54 billion. As ever, the number of new net subscribers is equally important to investors. Six million new streamers are expected. The crackdown on password sharing may have helped achieve this target.
The street also expects reports from Procter & Gamble, Alcoa, Abbott Laboratories, and Nasdaq.
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