FTSE 100 steady, US stocks on course for best month of the year, Mitchells & Butlers swings to pre-tax loss, OPEC to meet and Dr Martens’ US woes intensify

“The FTSE 100 made a steady start on Thursday after mixed trading in the US and gains in Asia overnight,” says AJ Bell Investment Director Russ Mould.

“US indices are on course to chalk up their best month of the year in November. Data points and commentary from the Federal Reserve have largely reinforced the idea that the current rate hiking cycle is at its end.

“It now feels like the market is waiting for the next big kicker to push it higher with forthcoming US jobs figures, inflation readings and central bank meetings as potential catalysts.

“Later today the Fed’s preferred measure of inflation – personal consumption expenditures index data – is published and this could help determine if Wall Street sees out a November to remember with a bang or a whimper.

“All Bar One owner Mitchells & Butlers’ results got the kind of reception reserved for a flat beer as the company swung to a pre-tax loss thanks to cost headwinds. While it says these are abating and sales are growing the company faces some renewed pressure on costs in 2024 thanks to the increase in the national living wage announced in the Autumn Statement.

“Metro Bank shareholders have approved its rescue deal but it will be a very different entity, with its commitment to a high street model with lots of branches and staff partly diluted.

“Oil prices will be in focus as the OPEC+ cartel meets to consider an extension to production cuts – Brent crude has slipped from levels above $90 per barrel seen amid geopolitical tension in the Middle East.”

Dr Martens

“The US consumer spending boom fuelled by stimulus cheques and high levels of savings amassed during the pandemic looks to be on its last legs. That cash has now been spent and more people are turning to credit cards and buy now pay later, implying that consumers are still addicted to spending but the momentum is unsustainable.

“Dr Martens’ problems continue to be centred on the US, in particular wholesalers are reluctant to stock large volumes of its boots and shoes. That suggests a lack of confidence in US consumer spending power and a headwind the bootmaker could do without.

“Understandably the share price has taken another knock, putting it at a new all-time low around 90p, a fraction of the 370p IPO price in 2021.

“When times are good, Dr Martens has shown it is possible to make decent returns from its iconic products. But when the economic outlook is more uncertain, the company suffers from having its products priced slightly above the level at which someone wouldn’t think too hard about paying.

“No-one can accuse the business of standing still. It has been busy investing in technology projects to make the business more efficient and to save money over the longer term. It has also been pushing its direct to consumer offering so it can have more control of the brand, learn more about customer spending habits and make bigger margins.

“While the market backdrop is not currently in its favour, when the winds change it should be in a stronger position to capitalise on the growth opportunity.”

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