Markets eye US jobs numbers, Wetherspoons unhappy and Marshalls hit by slump in household paving stone demand

“The key event of the day for markets is the release of new US jobs numbers as these will be analysed closely by the Federal Reserve at its November interest rate decision. The consensus is non-farm payrolls to have increased by 250,000 in September versus 315,000 in August. The unemployment rate is seen unchanged at 3.7%,” says Russ Mould, Investment Director at AJ Bell.

“While the non-farm payroll estimate implies a slowdown in jobs growth, hitting those forecasts may still send a signal to investors that the jobs market remains buoyant enough and that the Fed will stick to its path of raising rates.

“US stocks were weak yesterday, but pre-market indicative prices point to a flat opening when shares resume trading on Friday.

“The FTSE 100 saw a small tick up (+0.1%), with defence, banking, utilities and energy stocks leading the way.

“Key companies reporting next week include PepsiCo and Domino’s Pizza in the US, which will reveal more about consumer spending habits. We then have the big banks starting to report at the tail end of the week.”

Wetherspoons

“The pubs company is not having a great time. Coming out of lockdown in 2021, a lot of people predicted a big boom for the leisure and hospitality industry, but it’s not played out as expected.

“People have got used to reaching for the fridge when they want a cold beer, not stepping outside to the pub. Wetherspoons says it has been a ‘momentous challenge’ to get them on its bar stools again.

“There are signs of a pick-up in trading in recent weeks which explains why the share price has jumped, particularly as a lot of bad news was already priced in. However, operating profit margins are being squeezed as hard as a barman trying to get all the juice out of a lime.

“Inflation has been brutal for every business, and when your modus operandi is to sell drinks cheaper than others, it’s hard to be too aggressive on price increases, which means sacrificing some profit margin.”

Marshalls

“In recent years there has been a trend for households to dig up the front garden and replace the weeds with paving stones, so they can park their car and not worry about traffic wardens. As a paving stone specialist, Marshalls enjoyed booming sales, also helped by plenty of activity among its corporate customers. Part of this sales momentum has now disappeared.

“Marshalls’ shares took another tumble on a new earnings warning, meaning they are now down 72% since September 2021. Its landscaping products business is heavily exposed to repair, maintenance and improvement trends in the private housing market, and demand is dropping. For anyone watching their pennies, it’s an easy decision not to splash many thousands of pounds to get the front drive spruced up.”

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