FTSE 100 follows US stocks lower after better-than-expected services data, Ashtead raises guidance and Marston’s gets World Cup boost

“We’re very much in looking glass territory again with investors desperate for the Fed to ease up on rate hikes and therefore taking any bit of good news about the economy as bad news because it will delay the longed-for pivot,” says AJ Bell Investment Director Russ Mould.

“Better-than-expected figures from the US services sector, combined with some profit taking after a strong run, resulted in losses across the Atlantic overnight and the negativity permeated into Asian shares with some of the optimism about a loosening of Chinese restrictions also beginning to fade.

“The next key US releases come on Friday with producer prices data and a reading of consumer sentiment. Next Wednesday is decision day on US rates and the Fed’s actions could help set the tone for the tail end of 2022 and first weeks of 2023.

“A cold snap in Europe is putting upward pressure on gas prices again after a mild autumn had helped fill storage tanks. Further increases in energy bills for individuals and businesses could give investors and politicians another headache they could well do without as we head towards Christmas.”

Ashtead

“Ashtead is proof that some businesses can flourish even in the darkest of days. Half year revenue, profit and dividends are all up at the construction equipment provider, and it says full year results will be better than previously expected.

“The company has enjoyed a tailwind for more than a decade whereby companies have shifted to a rental rather than ownership model for construction-related equipment, and Ashtead has been able to serve their every need by rolling out more depots and having the right kind of machinery in plentiful supply.

“Add on top an ongoing US government programme to invest heavily in infrastructure and Ashtead continues to collect the big bucks.

“Growth is coming from the US, which is Ashtead’s principal operating region. Margins are also a lot bigger in the US versus the UK, perhaps raising the question whether the latter region has a long-term future within the group.

“Last year’s UK divisional earnings were boosted by providing testing sites for Covid swabbing and that tailwind has now disappeared. Canada, on the other hand, is becoming more interesting to the group with good market conditions, strong volume growth and rising rental rates.”

Marston's

“Shareholders have a return to profit to toast at Marston’s but the pub chain still faces several challenges as it looks to end 2022 on a high note.

“Not least the potential impact of further rail strikes which could lead to cancellations for Christmas parties and people socialising at home rather than struggling with a transport conundrum.

“Marston’s may enjoy some benefit from people feeling too strapped to dine in a fancy restaurant but still keen to go out for a meal with friends and opting for some pub grub instead.

“Like the whole industry, Marston’s will be one of the most fervent supporters of the Three Lions, having already benefited thanks to the team’s progress so far in Qatar.

“If England can progress beyond a tricky opponent in France on Saturday, Marston’s could look forward to even more people choosing to watch the remaining matches in the pub.

“Marston’s has done as good a job defending itself from inflationary pressures as Messrs Maguire and Stones will look to withhold jet-heeled French striker Mbappé this weekend and longer term the company remains markedly confident in its plan to reduce its borrowings and get sales up to £1 billion.”

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