FTSE steady ahead of central bank meetings, Metro Bank returns to profit, healthy outlook for GSK, wind goes out of Vestas’ sails and Next avoids disaster

“After a positive couple of days, the FTSE 100 was in consolidation mode on Wednesday,” says AJ Bell Investment Director Russ Mould.

“All eyes will be on central banks on both sides of the Atlantic as both the US Federal Reserve and Bank of England get ready to deliver their rate decisions over the next 24 hours or so.

“While we have a good idea of the quantum of increase both parties will deliver, it will be all about the mood music. Investors are like thirsty travellers in the desert, hoping for even the tiniest drop of comfort to suggest the rate cycle may have run its course.”

Metro Bank

“A long overdue return to profit at Metro Bank comes after shareholders have endured a world of pain for years.

“The company’s branch-led model, focus on customer service and little quirks like free water and biscuits for dogs helped it make a big noise when it first joined the UK stock market six-and-a-half years ago. Ultimately it couldn’t back this up when it came to the fundamentals of earnings and cash flow. It still needs to convince the market it is now on a sustainable path.”

GSK

“In recent weeks, pharma firm GSK seems to have had the cure for what has been a sickly share price over the long term.

“Raising guidance in its latest update on strong vaccine sales, there is increasing excitement about its new respiratory syncytial virus (RSV) vaccine candidate.”

Vestas

“A profit warning from wind turbine maker Vestas Wind Systems will provide a jolt to lots of managers running ESG-related funds as it has been a popular stock for green strategies.

“The longer-term outlook for renewables is positive but in the short term, Vestas’ warning suggests energy security is being prioritised over the energy transition.”

Next

“Disaster has been averted. With many online fashion retailers struggling in recent months, and fears that the high street would see a massive slowdown in trade amid the cost-of-living crisis, Next’s trading statement could have been horrific.

“Instead, we find that a weak August was saved by a strong September followed by a mixed October. Add in a decent boost from finance interest income and you’ve got a resilient outturn with 0.4% sales growth for its third quarter. In this market, a tiny bit of growth is considered a big win.

“At this time of year, fashion retailers welcome a drop in weather as it means they can start shifting more coats and jumpers which often sell for bigger profit margins than summer-wear. Although we’ve just had a mild end to October, the outlook for November is more conducive to shifting winter-wear and Next will no doubt be hoping for a strong end to the year.

“Lots of tips in newspapers and online about wearing layers to keep yourself warm and not have the heating on all the time should also play to Next’s strengths, driving sales of jumpers and scarves.

“Next’s success in September tallies with the latest ONS retail sales data, whereby UK clothing stores sales volumes increased by 0.1% in the month.

“While Next’s management hasn’t commented on the current state of the market, a cautious tone in earlier announcements was the right approach and chief executive Simon Wolfson will no doubt be staying this course. The one piece of reassurance for the market is that the company’s guidance for sales and profit hasn’t changed, which implies that management is not overly worried about a pre-Christmas slump in trading.”

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