11th Oct 2024. 10.51am
Weekly Briefing – Friday 11th October
Market | Movement this week (%)* |
---|---|
FTSE 100 | -0.70% |
FTSE 250 | -0.94% |
FTSE All-Share | -0.72% |
AIM 100 | -1.10% |
AIM All-Share | -0.72% |
* Price movement from Monday's open at 8am
Regency View:
Weekly Briefing – Friday 11th October
Market Overview
Dear Investor,
This week, the health of the US economy took centre stage as fresh data gave us plenty to chew on…
Inflation dipped to 2.4% in September, down from August’s 2.5%, but it wasn’t the smooth ride everyone hoped for—core inflation, which leaves out volatile items like food and energy, climbed a little faster than expected at 3.3%. It’s clear the Fed’s fight against inflation is far from over.
Jobless claims shot up unexpectedly, with 258,000 Americans filing for unemployment. The labour market, while still solid, seems to be throwing out mixed signals. Just weeks before the November election, these economic indicators are likely to stir debate on the campaign trail.
On the back of this week’s data, the US dollar touched a one-month high, signalling investors are increasingly betting that the Federal Reserve will be cut rates less aggressively than first thought. The S&P 500 also grabbed headlines, breaking to new trend highs as traders appeared unfazed by the spike in jobless claims.
With the November election looming, this economic backdrop is becoming more than just numbers on a page—it’s ammunition for both political camps. Vice President Kamala Harris, in her bid for the White House, faces an uphill battle against voter frustration over lingering inflation, while the Trump campaign is seizing on the latest data to argue that the economy is in for a rough landing under current leadership.
Wishing you a fantastic weekend,
Tom
Market Movers
On the rise: Cornish Metals (AIM:CUSN) +15.7% on the week
Shares in Cornish Metals have been on the rise this week after the company announced the appointment of Don Turvey as its new CEO, following the approval of his UK work visa.
This leadership change comes at a crucial juncture for the miner, as it continues to advance its ambitious South Crofty tin project. With a plan in place, investors are responding positively to the prospect of fresh leadership guiding the company’s next steps.
Additionally, the company has engaged Endeavour Financial as a financial adviser to secure project financing for South Crofty. This strategic partnership is seen as a significant step forward, providing Cornish Metals with the expertise needed to navigate the complex financing landscape.
The collaboration aims to optimise funding sources for the project’s construction, further boosting investor confidence. With a Preliminary Economic Assessment indicating a promising future for the South Crofty project, including a substantial after-tax net present value and a healthy internal rate of return, the market is taking notice.
REGENCY VIEW:
Despite the lack of revenue generation and ongoing net losses, the stock has shown some positive momentum recently, with a 1-month increase of 19.6% and a 3-month rise of 34.2%, suggesting investor optimism as the company advances its South Crofty tin project and seeks financing support.
Shares in housebuilder Vistry plunged on Tuesday following the company’s announcement of a significant reduction in profit guidance for the 2024 financial year.
Vistry revealed that cost projections for 9 of its developments in the South Division had been understated by about 10%, impacting the total build costs. As a result, the company expects to reduce its adjusted profit before tax by approximately £80 million for FY24, with further reductions of £30 million in FY25 and £5 million in FY26.
This revelation shook investor confidence, as Vistry’s profit forecast was downgraded to £350 million for FY24, well below previous expectations. The market reacted swiftly, sending Vistry’s stock tumbling as concerns grew over the company’s ability to manage its costs and maintain profitability across its development projects. The miscalculations, though isolated to the South Division, sparked broader concerns about oversight and financial management within the company.
Despite the setback, Vistry remains optimistic about its broader strategy, particularly its Partnerships model, which focuses on delivering mixed-tenure housing. The company reaffirmed its commitment to completing over 18,000 units in FY24 and maintaining a net cash position by the year’s end. Additionally, Vistry’s £130 million share buyback programme, announced in September 2024, remains intact, signaling the company’s confidence in its long-term goals despite the short-term hit to profits.
REGENCY VIEW:
Vistry’s recent profit warning has cast doubt on its ambitious growth strategy and raised concerns about internal controls. While the group’s affordable housing focus aligns well with market demand and government priorities, the profit hit and potential for further management missteps make other stocks in the sector look more attractive in the near term.
Sector Snapshot
It’s been another week of gains for the Energy sector as tensions continue to escalate in the Middle East.
Materials, on the other hand, have shown heavy losses as the Chinese stimulus rally starts to unwind.
UK Price Action
It’s been yet another week of choppy sideways consolidation for the FTSE 100. What looked to be a decisive break lower on Tuesday turned out to be just another move sideways as the market tracks its 50 day moving average. Long-term trend and technical remains bullish.
Disclaimer:
All content is provided for general information only and should not be construed as any form of advice or personal recommendation. The provision of this content is not regulated by the Financial Conduct Authority.