FTSE steps back ahead of Jackson Hole, CRH set to get busy, and Hays forecasts faster profit recovery

“It’s the one they’ve all been waiting for. The Super Bowl of high finance – the Jackson Hole symposium – kicks off tomorrow and there’s no question who the star man is,” says AJ Bell Financial Analyst Danni Hewson.

“The spotlight will be on the chair of the US Federal Reserve Jerome Powell and whether he says anything on the tapering of financial support for the economy.

“The incentive for keeping things low key is that the Delta variant has made the global economic recovery more fragile and it may be the digital-only event turns into something of a non-event.

“The FTSE 100 was portraying some signs of nerves ahead of the event as it dipped modestly in early trading on Thursday.”

CRH

“Construction materials firm CRH looks set to be pretty busy for the foreseeable future as the US gets set to launch a huge infrastructure programme.

“But it’s not just US spending on roads and bridges, CRH is a highly diversified business across different products, geographies and end-uses providing exposure to different sweet spots in the global economic recovery.

“Little wonder the company was feeling so confident as it unveiled a very strong set of first half results which inevitably benefited from the lifting of Covid restrictions which blighted numbers in the first half of 2020.

“It was particularly encouraging to hear CRH say it expects to do better than the record second half it enjoyed last year.

“The company is building up a wall of cash which it can deploy by investing organically in the business, returning cash to shareholders through dividends and buybacks and pursuing bolt-on acquisitions.

“CRH’s record on M&A is pretty strong, with a focus on easy to swallow deals, rather than big messy transactions which could give the company indigestion.

“There are two specks in this pretty cloudless sky for CRH – one is the risk of adverse weather causing construction delays and the other is the input cost inflation which is dogging many businesses right now.”

Hays

“A key problem facing many employers is the difficulty in finding skilled staff. While these shortages are bad news for business as a whole and for the economy, they aren’t necessarily bad news for the companies whose role it is to track down the right people for a job.

“This is evident in results from recruiter Hays where it is benefiting from being able to charge top dollar for finding good candidates.

“This is helping profit to get back to, and even exceed, pre-pandemic levels faster than expected. This in turn is underpinning the resumption of ordinary and special dividends – music to shareholders’ ears.

“This scenario does put Hays under some pressure to deliver as proving its worth through a difficult period could yield significant long-term benefits, helping the company become even more embedded in firms’ recruitment processes.

“On the flipside if Hays is unable to solve employers’ skills shortages problem then its relevance and credibility could take a knock.

“Discretionary costs around travel and entertaining clients have been pushed lower by the pandemic and it will be interesting to see to what extent these come back.”

These articles are for information purposes only and are not a personal recommendation or advice.