FTSE higher after bumper US gains, UK on cusp of recession and The Works thinks value will be a winner this Christmas

“The FTSE 100 consolidated its gains from the day before as US stocks surged overnight on Thursday’s lower-than-expected inflation reading,” says AJ Bell Investment Director Russ Mould.

“For once talk of a pivot by the Federal Reserve might be more than just hot air, with the easing of inflationary pressures accompanied by signals from some Fed officials they might be prepared to ease up on rate hikes.

“Adding to the positive sentiment was further evidence of a softening in China’s zero Covid position, helping the miners to gains on the UK market this morning.

“To the surprise of precisely no-one who has been paying attention, GDP figures for the three months to the end of September show the UK economy contracted by 0.2%.

“Expectation will now build that the UK will have achieved the unwanted technical definition of recession, with a second consecutive quarterly period of negative growth, by the end of the year.

“The market has largely priced in such a prospect and the domestic-facing FTSE 250 index traded higher today despite the economic turmoil.

“Though the news doesn’t make balancing the books any easier for Chancellor Jeremy Hunt ahead of his Autumn Statement given the implied drop in tax revenue.”

The Works

“Times are tough on the high street and seller of bargain books, arts and crafting supplies The Works is seeing sales growth slow. While there are some extenuating circumstances and it’s only a slight softening that’s been reported for now, as an indication of the direction of travel it is not hugely encouraging.

“The Works is at least partly reliant on impulse purchases and people have no choice but to be more disciplined with their spending.

“That said, heading into the festive period it will be an obvious destination as people look to do Christmas on a budget and that underpins management’s confidence about the outlook for the coming weeks.

“Unlike some of its retail rivals, The Works at least benefits from a balance sheet in decent shape and it has a clear value-based proposition which should be well aligned with the current economic climate.”

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