Markets bounce back, Greencore and YouGov jump on positive updates, retail sector on profit warning alert due to warm weather

“Investors regained their appetite for risk after a troublesome start to the trading week linked to concerns about conflict in the Middle East and how the associated hike in commodity prices could feed through to inflation and interest rates staying higher for longer,” says Russ Mould, Investment Director at AJ Bell.

“Triggering the U-turn in the market mood were comments on Monday from Fed Vice Chair Philip Jefferson who implied the US central bank needed to ‘proceed carefully’ with any further rate hikes. This raised hopes in the market that the Fed might not need to lift rates any higher, particularly if higher bond yields were already threatening to act as an anchor on economic activity. Wall Street ended the session on a bright note, setting the tone for a more prosperous day across global markets on Tuesday.

“Markets across Europe opened Tuesday with a spring in their step, including a 1.3% hike in the Dax index. In Asia, the Nikkei soared by 2.4% as investors went bargain hunting for Japanese stocks.

“The FTSE 100 was one of the few major indices to buck the negative trend yesterday thanks to the rising oil price pushing up shares in index heavyweights BP and Shell. The UK market extended those gains with a further 0.9% rise to 7,560 on Tuesday, led by financials, utilities and housebuilders.

“Sandwich king Greencore jumped nearly 14% after saying full year operating profit would be ahead of market expectations and that it would buy back more shares.

“It’s a tough time to be a recruitment consultant given so many firms are unwilling to commit to hiring amid the uncertain economic outlook. Robert Walters declared its performance to be ‘resilient’ but the numbers tell a different story. A 17% decline in third quarter gross profit suggests life is tough for anyone trying to earn their crust placing individuals into vacant roles.

“YouGov saw its shares jump 12% after reporting a big jump in full-year profit. Chief executive Steve Hatch is only a few months into the job and kicks off his tenure with a sense of optimism.”

Retail Sector

“Next saw a small share price recovery after a volatile few days caused by the market worrying about the unseasonably warm weather.

“Early October should be the time of year when it gets dark and cold, driving people to buy jumpers and coats. Instead, the past few days have seen warm weather – t-shirts and dresses were likely to have been front of mind rather than stuff to help you wrap up warm.

“The risk is that retailers like Next will say they had the wrong stock on the shelves to match the weather, meaning the sector is on high alert for profit warnings in the next month or two.”

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