Must read: global markets, China, UK house prices, Joules, Informa 

On a typically busy Monday morning, our head of investment rounds up the big news.

GLOBAL MARKETS 

European markets have opened higher with the DAX in Germany outperforming. The FTSE 100 is in the green, lifted by shares of Informa which are trading at the top of the UK index thanks to strong top and bottom line 10-month results. It is a very busy week for the UK economic calendar with key unemployment data on Tuesday, inflation figures on Wednesday and retail sales on Friday. Plus, the Chancellor Jeremy Hunt prepares to unveil a raft of spending cuts and tax increases as part of his Autumn Statement on Thursday in order to plug the multi-billion-pound fiscal black hole. 

Following the best week for the S&P 500 since June, driven by softer-than-expected US inflation figures, equity market futures are pointing to a softer open at lunchtime, on track to offset some of Friday’s bullish momentum. Over the weekend, Fed Governor Christopher Waller said the central bank may opt for less aggressive rate increases at its next meetings, but insists the Fed is not softening on inflation.  

It was a mixed session overnight in Asia with the Nikkei and the Kospi under pressure while the Hang Seng outperformed the wider region. SoftBank Group shares fell by double digits in Japan after its Vision Fund reported another heavy loss for the third straight quarter. Meanwhile in China, Beijing and a number of other cities reported a record number of Covid infections, despite the authorities easing some lockdown measures last week. China has also reportedly unveiled a new rescue package for its embattled property sector sending shares in the sector soaring. Country Garden Holding for example gained around 50% in today’s trade while Dexin China skyrocketed by 140%. 

President Xi Jinping and President Biden get set for bilateral talks in Bali ahead of the G20 Summit. In their first face-to-face meeting since Biden took to the White House nearly two years ago, the US and China are expected to discuss the war in Ukraine as well as tensions in Taiwan.

UK RIGHTMOVE HOUSE PRICES 

UK asking house prices dropped by 1.1% between October and November or £4,159 versus a 0.9% rise in the previous month. According to Rightmove, first time buyers have been hit hardest with demand down 26% year-on-year. Property prices rose by 7.2% in November year-on-year slowing from a rise of 7.8% in the prior month. 

This morning’s figures on asking prices from property website Rightmove confirm other recent data on the UK housing market to suggest that demand is cooling on the back of rising mortgage rates and the chaos in the market in the aftermath of the mini-budget which sent borrowing rates through the roof. The fiscal fiasco added to existing pressures from the Bank of England’s rate hiking path to make mortgages less affordable, weighing on asking prices for homes across Britain, quickening the pace of the housing market slowdown. With the UK on track to enter a recession by the end of the year, real incomes are declining as inflation eats away at household budgets, pushing asking prices lower and weighing on the number of transactions in the property market as potential buyers wait until prices come down further into next year and mortgage rates ease off.

JOULES 

Joules Group (LSE:JOUL) announced plans to appoint the administrators and suspend trading in its shares. It comes after various discussions with investors about an equity raise including Cornerstone Investment and the retailer Next appear to have fallen through. Last week it reported revenue figures for the 11 weeks to 30th October which fell short of analysts’ expectations driven by softer online sales. The fashion brand’s cash crunch is putting around 1,700 jobs at risk with shares now suspended on AIM this morning, pending clarification of the company’s financial position.  

Joules is the latest victim of the UK’s retail crisis as the demise of the high street and the cost-of-living crisis bite. Just last week Made.com entered into administration after the interior design and DIY pandemic boom faded post covid, along with its furniture sales. Joules has been struggling with the squeeze on household budgets after the pandemic and the war in Ukraine boosted inflation, supercharging the cost-of-living, leaving far less money left over for households to spend on retail. On top of that retailers including Joules have been grappling with the rising cost of everything from materials to workers’ wages to energy bills. Outdoor goods vendor, the Garden Trading Company which is owned by the same parent company is also on the brink of collapse.  

The latest UK retail sales figures underscore the difficulty facing shops across Britain, with a 6.9% slump year-on-year in October as retail sales still languish below their pre-covid February 2020 levels. New retail sales figures will be released on Friday and are expected to highlight the current strain on the consumer.

INFORMA 

Shares in Informa (LSE:INF) have jumped at the open after reporting 10-month revenue and profit figures ahead of expectations. The events-organiser reported underlying revenue up 41% from January to October while raising its full-year top and bottom line targets. It now expects full-year operating profit of £490-£505 million, up from £470-490 million. 

The post-pandemic return to physical events has helped spur growth for Informa with B2B demand and Academic Markets enjoying impressive growth. It continues to target the US as a key growth area with the completion of its US data business acquisition Industry Dive. Informa also continued to return cash to shareholders with over £450 million of its £725 million share buyback programme now completed and the resumption of its ordinary dividend. Shares in Informa are outperforming the market this year, gaining almost 10% year-to-date and are enjoying particularly strong gains in today’s session, lifting shares to the top of the FTSE 100.