It’s been another fairly uninspiring start for markets in Europe today as we looked ahead to the latest UK inflation numbers and testimony from Bank of England policymakers Silvana Tenreyro and Deputy Governor of the Bank of England David Ramsden to MPs later this morning.
The pound had been trading fairly steadily in the lead up to today’s inflation numbers, and has remained fairly unmoved after UK inflation came in as expected at 3% in September, while core prices remained steady at 2.7%
This rise in inflation, to a five year high increases the pressure on the Bank of England to restore the base rate to 0.5% next month, and reinforce last year’s folly of cutting interest rates at a time when the pound had already weakened. This had the effect of amplifying the shock of sterling’s plunge in the wake of last year’s Brexit vote. If tomorrow’s wages data fails to maintain the current gap between prices and incomes, the squeeze on incomes will increase further, at the worst possible time, just before Christmas.
On the companies front, Merlin Entertainments (LON:MERL) has seen its share price match the gravitational forces of its Oblivion vertical drop rollercoaster, sliding 20% after the company reported that revenue growth was flat in disappointing summer trading with management citing bad weather in Europe and Florida, as well as lower footfall due to concerns over terror attacks. The company did cite some successes with the opening of Legoland Japan, and stated that is expected Legoland New York to open in 2020.
Also disappointing Mediclinic International (LON:MDCM) warned shareholders that it would see earnings fall short by about 10% due to a disappointing performance in its South African and Middle Eastern operations.
On the plus side education publisher Pearson (LON:PSON) saw revenues for the year to date come in line with expectations, while at the same time the company tweaking the lower end of its profit expectations for the current year.
Ahead of the US open Netflix (NASDAQ:NFLX) is set to be in focus after the company posted yet another bumper quarter in adding 5.3m new subscribers, taking its total subscriber base to 109.3m. The company was also bullish on its outlook predicting that they expected to see another 6.3m subscribers by year end.
The company’s recent price rises to a number of its content packages don’t appear to be affecting demand for its content, which is just as well given that spending on new content is expected to remain high, at around $7bn-$8bn for next year. Revenues rose to $2.99bn, pushing the share price to new all-time highs in afterhours trading in New York.
Dow Jones is expected to open 4 points higher at 22,960
S&P500 is expected to open unchanged at 2,557.6
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