All eyes on US inflation numbers, BP CEO resigns, Apple’s iPhone 15 launch fails to inspire and Redrow warns profits could halve

“All eyes are on US inflation numbers set to be released later today as this data is crucial to the Federal Reserve’s decision-making on whether to keep raising interest rates or not,” says Russ Mould, Investment Director at AJ Bell.

“Core CPI is forecast to ease back from a 12-month rate of 4.7% in July to 4.3% in August. Falling inflation is exactly what the market wants, as it would give the Fed less of a reason to keep raising rates. However, Core CPI excludes food and energy, and the latter is a pressure point once again.

“Oil prices have risen by more than 25% over the past few months, which suggests a new inflationary pressure and something that will muddy the outlook for the Fed at its next rate meeting.

“Rising energy costs are expected to play a key role in lifting headline CPI figures from 3.2% in July to 3.6% in August. If this plays out as expected, it greatly diminishes the chances of the Fed taking its foot off the pedal with rates. The idea that the Fed will soon give clear guidance with regards to when the peak of rate hikes will occur is looking less likely by the day.

“While Wall Street slipped back a bit last night and Europe followed up with a mixed opening on Wednesday, the rising oil price has so far failed to derail stock markets. How long that situation lasts is another matter.

“Disappointing UK GDP figures didn’t help sentiment yet the FTSE 100 managed to hold firm, supported by strength among financial stocks.”

BP

“The overnight resignation of BP chief executive Bernard Looney has drawn a relatively relaxed market reaction.

“This will hardly do much for his ego given the sudden departure of a company’s boss often destabilises a share price.

“Investors may be reassured by the swiftness of the company’s actions after Looney failed to disclose previous personal relationships with colleagues.

“Assuming this is largely the end of the matter, even if an investigation by legal counsel remains ongoing, and chief financial officer Murray Auchincloss can lead the company through the transition to a new leader, then little harm may be done to the business.

“The nagging worry is that this is the tip of an iceberg and is reflective of wider problems with BP’s workplace culture. Given this uncertainty, it may be a few weeks before shareholders are sitting comfortably again.”

Apple

“When the headline grabbing new feature from the launch of the latest iPhone is a regulator-enforced change to its charging port, investors are likely to be underwhelmed, and that proved to be the case overnight.

“The iPhone 15 is, as its name suggests, the latest iteration of a highly mature product. Its announcement was also overshadowed by reports China is banning government officials from using iPhones at work.

“The big concern will be that there is little on offer from this latest iPhone to convince consumers to fork out the £799 and £999 required (in the UK) to buy the standard phone and the ‘Pro’ version respectively. People are under financial pressure and if that means they hold on to their old phone or buy an older version then they are likely to be happy to do so without a big incentive to do otherwise.

“In this context there should be little surprise Apple has made such a big push with its services arm – offering an ever-wider range of gaming, financial and multimedia products which it can sell to what is a very large installed base of iPhone owners.”

Redrow

“Bad news from housebuilders has become the norm as they adapt to a weakening property market. That might explain why investors have shrugged their shoulders to news from Redrow that its profits could halve in its new financial year.

“Affordability is a big problem for first-time buyers and existing homeowners looking to move to a bigger property. Housebuilders argue there is a shortage of homes in the country which means their business is not going to disappear completely.

“However, there is scope for property prices to fall much further given the potential for interest rates to stay higher for longer.”

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