In a fairly subdued session European markets have edged modestly higher, with the absence of US markets due to Thanksgiving keeping volatility, as well as interest fairly low.
Europe
Despite the lack of volume, investors are keeping one eye on events in Europe, and Germany in particular as a new government there takes shape, and what steps it might look to take in addressing an infection and hospitalisation rate that appears to be running out of control.
The FTSE100 is edging back towards the 7,300-level helped by some decent performances from the likes of Holiday Inn owner IHG and Premier Inn owner Whitbread, both of whom were on the receiving end of a broker upgrade on optimism over a rebound in demand in 2022.
On the downside, Vodafone and Imperial Brands were lower after going ex-dividend.
In a sign that trading conditions were picking up for the hospitality industry, All Bar One owner Mitchell and Butlers shares enjoyed a decent rebound after reporting an improvement in operating profit as covid restrictions were eased. Full year revenues came in at just over £1bn, down from £1.48bn in 2020, generating an operating profit of £81m, up from £8m in 2020.
Naturally most of this rebound has been seen in the second half of the year, with H2 sales of £846m, with lower VAT on food and non-alcoholic drinks helping to boost margins. The biggest problem facing the business however is ongoing supply chain costs, and rising energy and wage costs, which are likely to continue into 2022.
Despite these problems operating margins have improved to 7.6%, while overall losses narrowed to £42m.
US
US markets are closed for Thanksgiving.
FX
It’s been a quiet session for currency markets, with the New Zealand dollar continuing to slip back after this week’s rate hike from the RBNZ.
The US dollar has also taken a pause after the gains of the last week or so, with the euro pulling back off levels last seen in June 2020. In such a holiday shortened trading week its likely that we could well have seen the highs for the US dollar this week, though we could see another lift next week, as markets look towards next weeks November payrolls report.
Commodities
Oil prices are a little bit softer as the dust continues to settle over this week’s emergency SPR release. A lot has been made of what the OPEC+ response might be to this week’s events, ahead of their meeting next week, when the next 400k uplift to output is expected to occur. Given the small amount of the SPR release its hard to imagine that OPEC will be losing much sleep over this week’s events.
After all these reserves will eventually need to be topped up. The biggest concern remains over demand if European countries start to lockdown their populations again to limit hospitalisations.
The slightly weaker US dollar and closure of US bond markets for Thanksgiving has seen gold prices edge back higher again, after the declines of the last three days.
