- Inconclusive mid-term results leave Wall Street unsettled, with Dow Jones down 1.95%, S&P 500 down 2.08%, NASDAQ down 2.48% and Japan Nikkei down 0.98%
- Sam Bankman-Fried’s crypto empire is hit by a liquidity crisis
- Futures markets suggest a weak start for UK and European trading with losses of up to half a percent indicated.
- Sterling is almost unchanged versus the dollar at $1.138 and the euro at €1.136
Inconclusive Mid-Term Election Results
Wall Street took a bath last night as the US wrestled with the inconclusive mid-term election results whilst the world of cryptocurrencies was rocked by the apparent collapse of Sam Bankman-Freid’s business empire.
Q3 2022 hedge fund letters, conferences and more
It has been a wild week in Cryptoland, with the implosion of the FTX crypto exchange, which is now reported to have an $8bn black hole at the heart of it. At the beginning of the week its founder Sam Bankman-Freid was reportedly worth $16bn, Bloomberg reckon 95% of that disappeared in a single day, the fastest pace of one person losing money in history.
The events sent the wider crypto sector into a spin. Bitcoin lost a quarter of its “value” between the start of trading on Tuesday and midnight last night. It has rallied slightly since the $15,617 low of the wee hours, but remains under pressure. Other crypto “assets” also saw significant falls.
Bank stocks could be a bright spot in an otherwise gloomy market today after overnight reports that the government is going to cut the bank levy to try and preserve competitiveness for what remains a key contributor to the UK economy. Cutting the levy from 8% to 3% will leave banks facing an overall tax take of 28% when corporation tax rises to 25% from April. Currently, the industry is paying 27% in total.
It’s a busy day for company reporting in the UK today. British Gas owner, Centrica, who recently reopened the rough gas storage facility announced that trading has been strong and the company steered analysts toward upgrading their numbers.
The strength is coming from their upstream oil and gas production operations, whilst retail profitability is struggling. The company announced a further £25m of funding for customer assistance as people struggle with their rising energy bills. The group also announced a £20m share buy-back programme and investors responded by pushing the stock 9% higher at the open.
Fellow utility, National Grid, also reported solid trading, with underlying earnings 42% ahead at the half year stage. The group raised its interim dividend by 4% and raised its expected levels of future revenue growth and capital investment as the company funds the transformation of the UK’s energy networks toward a more renewable future. The shares rose 1.7% on the news.
Haleon's Earnings
Consumer healthcare giant, Haleon PLC (LON:HLN), recently spun out of GSK plc has reported strong growth in their third quarter trading update and raised their guidance for the full year slightly. They now see organic revenue growth of 8.0-8.5%% for the full year and for margins to be slightly improved, despite some additional currency impacts.
Haleon saw improved trading in their Oral Health category, where their Sensodyne brand has a leading position. Respiratory health products have benefited from the seasonal bugs that are going around. Their only weak spot was vitamins, minerals and supplements which was up against tough prior year comparables.
Haleon shares opened 1% higher.
AstraZeneca plc have guided profits higher after releasing a Q3 trading report that revealed revenues 19% ahead at constant dollar rates and earnings per share growth of 70% (do not adjust your set. 70% really). Growth was driven by all disease areas and the addition of Alexion’s revenues after its acquisition in July.
AstraZeneca’s portfolio of new generation cancer treatments grew overall oncology product revenues by 20%, whilst cardiovascular revenues came in close behind at 19% growth. AstraZeneca have guided to full year earnings growth of around 30%, before a mid-to-high single digit impact from currencies. Much of this was already factored into market views and the stock opened 1.4% higher.
Once investors have digested the company news, attention will turn to the U.S. futures markets suggest Wall Street could claw back some of the overnight losses, but that will likely depend on the outcome of the inflation data due out at 13:30 hrs.
Economists are forecasting that the rate will drop from last month’s 8.2% print to 7.9%. If the actual number is much different from that, we could see fireworks from bonds, stocks and currencies.
Article by Steve Clayton, Head of Equity Funds, Hargreaves Lansdown
