Stocks higher as Powell says pace of rate hikes to ease before Christmas, UK house prices slump and Hotel Chocolat reshapes for the future

“For the first time in an age it feels like Federal Reserve chair Jerome Powell is telling markets what they want to hear,” says AJ Bell Investment Director Russ Mould.

“The message that an easing in the pace of rate hikes could come before the end of the year was just what investors were looking for and raises the prospect of a Santa Rally heading into Christmas.

“Powell tempered his remarks with a note of caution that the fight against inflation is far from over but it’s clear which part of his speech has resonated as US stocks chalked up big gains and the FTSE 100 makes a solid start on Thursday.

“Whether the optimism will be sustained could be determined as soon as tomorrow when new US jobs data is released. Continuing tightness in the labour market is a key reason why the Fed is taking a tough stance on rates and any sign of that easing would be another catalyst for shares. Before that we will get the latest reading from the Fed’s preferred measure of inflation.”

UK housing market

“It provides an uncomfortable jolt to see UK house prices falling at their fastest rate (excepting the height of the pandemic) since the global financial crisis.

“While the data from Nationwide was worse than expected, given the turmoil in the mortgage market which followed September’s mini-Budget it can hardly be seen as a huge surprise.

“Predictions of a double-digit fall in prices over the next 12 months feel far from outlandish given the inflationary pressures on potential purchasers’ finances and the much higher cost of borrowing.

“Housebuilder shares, already heavily beaten down this year, were higher on the Nationwide data and even estate agents like LSL Property Services and Foxtons were only a smidge lower. This shows how the market has already priced in a lot of bad news regarding the property market.”

Hotel Chocolat

“Hotel Chocolat is in an odd situation whereby plenty of people are buying its products, yet it has made a big strategic misstep with overseas expansion.

“At face value, revenue and profit is up, UK store sales are way ahead of pre-pandemic days and margins are improving. Yet once you factor in one-off costs and adjustments linked to a change in strategy for international operations then the business is loss-making.

“One could argue that businesses don’t always get things right and it is better to test the water for new initiatives and pull away or rethink if they don’t work, rather than do nothing and risk getting stale.

“A new plan to shift the overseas focus to wholesale and licencing operations will reduce the need for heavy spending, and a greater push to sell items at full price will be beneficial to profit margins.

“It makes sense to focus on quality rather than quantity of sales in the current environment, and to be more considered with marketing spend.

“Like all retailers, Hotel Chocolat will be hoping for a bumper festive season. Even though many people are under financial pressure there is nothing like a nice box of chocolates if you’re lacking inspiration for a Christmas present. In that sense, Hotel Chocolat could be more resilient than people expect.”

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