Ear to the Ground
25 October 2024
After rather a busy couple of weeks for economic data it took a bit of a back seat this week. In the UK we saw the release of the latest sentiment data within the manufacturing and service sectors. With readings above 50, both indices continued to imply expansion, although note was taken that both figures were lower than those seen in September. As we head toward the budget however consumer confidence remains weak, hitting its lowest level this year, with the public concerned about changes to the current tax regime will which result in them being worse off financially.
In the US, the same sentiment data for the manufacturing and service sector continued to show the same pattern as previous, pointing to a contraction in manufacturing and expansion in the service sector. Strength in the latter is important for an economy which is driven so much by consumption.
Finally, in Japan we saw the release of inflation data to October. This showed that core consumer price inflation rose at 1.8% year on year. Whilst this was marginally above the consensus forecast of 1.7%, it marked a decline from the 2% recorded in September. This perhaps allows the Bank of Japan to take more cautious growth to raising interest rates moving forward.
We entered reporting season for corporates this week and there were some strong numbers from UK banks. Here we saw positive news from the banking sector, with earnings exceeding expectations at Barclays, Lloyds and NatWest, with the latter also raising future forecasts.
Making all the headlines however were the results from Tesla. Whilst revenue was a little short of expectations profitability for the third quarter was higher than forecast. The beat was by quite a considerable margin. It was areas outside of automotive revenue where the largest gains were seen in energy generation and storage revenue. Investors also took comfort in the ‘best guess’ estimate that vehicle sales growth will be 20% to 30% next year, which were stronger than they were expecting. Proof will be in the delivery.
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