Investors await US jobs and Fed updates, Abrdn to miss out on FTSE 100 promotion and Mulberry swings to loss as sales slump

“Despite all the doom and gloom bestowed upon investors this year, there has been a Christmas miracle for patient individuals holding large UK stocks. The FTSE 100 last night managed to claw back all its year-to-date losses and now it’s managed to nudge ahead again, meaning the blue-chip index is now in positive territory,” says Russ Mould, investment director at AJ Bell.

“While that is encouraging, it’s important to note we’ve been here multiple times already in 2022, only for stocks to ease back again.

“The fate of the market is currently in the hands of popular dividend paying stocks Shell, Lloyds, BP and Unilever, with these names holding fort on Wednesday. A rise in the value of Brent Crude oil certainly helped the commodity producers, yet there remains a headwind in the form of weak factory data from China.

“The purchasing managers’ index is an important indicator of economic activity as it reflects the confidence of senior industry representatives. China’s economic activity has been hit by its zero-Covid policy and so if the country is to achieve a pick-up in GDP growth figures, then it needs to relax the rules to drive a recovery.

“Also important to global markets will be new US job figures and the latest speech from Federal Reserve chair Jerome Powell, both due later today. November’s ADP labour figures are expected to show a slowdown, with 200,000 jobs created versus 261,000 in October. Powell is likely to comment on the state of the jobs market as well as the economy when he talks at the Brookings Institution. The central bank head is eager to combat inflation by pushing up interest rates, but at the same avoid prompting a recession by causing consumers and businesses to radically scale back spending.”

FTSE reshuffle

“The FTSE 100 is poised to get its quarterly makeover with asset manager Abrdn set to miss out on an immediate return to the top tier of the London market, based on Refinitiv data. The quarterly reshuffle decision was calculated on last night’s close.

“After what felt like a symbolic relegation from the FTSE 100, Abrdn shares have seen a strong recovery in recent weeks on hopes the company allergic to vowels has been able to turn the tide on outflows, but it has just fallen short in a bid for index promotion.

“Of the names expected to make the move up mining services firm Weir is being rewarded for a more coherent and focused strategy which is beginning to pay dividends for the company.

“Oil prices have been volatile in 2022 and Harbour Energy is turning into a yo-yo stock having already been promoted and demoted this year and is set to go back to the FTSE 250 ranks once again.

“This shows the risks associated with shares in companies reliant on the price of a commodity over which they have no control.”

Mulberry

“Not all luxury brands are created equal. While you’d expect posh handbags seller Mulberry’s wealthy clientele to be insulated from cost-of-living pressures, its first half results have more in common with your humble high street retailer than a high-end brand.

“Even though the company has raised prices, sales have fallen, and Mulberry is in the unenviable position of chalking up a material loss. That loss could have been even worse if the company hadn’t hedged its energy costs for three years in October last year, so management deserve a pat on the back for that move.

“One bright spot for Mulberry came from China where sales were appreciably higher – though the recent turmoil in the country could undermine this positive trend.

“A key plank of the strategy is to build on Mulberry’s Asian presence and the company also plans to bring distribution in-house, making its online and physical proposition more closely aligned and moving away from a franchise model to full ownership of stores. 

“However, there are risks to this approach and after today’s half year numbers CEO Thierry Andretta will be under big pressure to deliver.”

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