Markets poised for Powell at Jackson Hole, UK energy crisis deepens, Micro Focus catches $6 billion bid

“The energy crisis continues to escalate in the UK as the latest price cap is announced but for the markets all the focus is on Jackson Hole where, this afternoon UK time, Federal Reserve chair Jerome Powell is set to outline his position on interest rates,” says AJ Bell investment director Russ Mould.

“Gains on Wall Street overnight have helped to steady nerves a touch ahead of Powell’s address. Expectations have been successfully managed, so if he is even a beat away from full hawkish mode there is a chance the market might rally.

“There is a divergence between the inflation picture on either side of the Atlantic. In the US, its relative energy independence means it is not being as acutely affected by rising prices. In continental Europe and the UK, it’s a very different story.

“With households in limbo waiting for a rescue package from whoever prevails in the Conservative leadership contest, the harm to consumer sentiment is only likely to fester.

“The need to find potentially hundreds more a month to light or heat a home is likely to squeeze disposable incomes to such an extent that spending on going out, buying new clothes, furniture or going on holiday will become beyond the means of many people. That spells bad news for already pressured retailers and other consumer-facing firms.

Micro Focus

“Weak sterling, to match a gloomy outlook for the UK economy, is once again leaving UK plc vulnerable to overseas bids and Micro Focus International looks to have fallen prey to a $6 billion offer from larger Canadian rival Opentext.

“While the premium for shareholders looks pretty healthy when compared with yesterday’s close, it is below the level the company traded at in 2019. It also further dilutes an already pretty threadbare-looking tech sector on the UK market.”

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