Weekly outlook: FTSE set to reshuffle indexes

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25 November 2022

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Portfolio Adviser

Monday 28 November

– First-half results from Brickability
– German retail sales
– In Asia, quarterly results from Pinduoduo

Tuesday 29 November

– Full-year results from Marston’s, Greencore and Topps Tiles
– First-half results from GB Group
– UK Nationwide house price survey
– US Case-Shiller house price index
– US Conference Board consumer confidence index
– In the US, quarterly results from Autodesk, HP Enterprises and NetApp
– Shaftesbury full-year results

Wednesday 30 November

– Full-year results from Future
– First-half results from Pennon, Mulberry, Hornby, LendInvest and IG Design
– Chinese purchasing managers’ indices for manufacturing and services
– UK mortgage approvals
– EU inflation figures
– US Federal Reserve Beige Book
– US oil inventories
– US pending homes sales
– In the US, quarterly results from Salesforce.com, Snowflake, Hormel Foods and Splunk
– FTSE All Share Index quarterly review

The FTSE All Share Index quarterly review will take place, with a number of promotions and relegations set to be announced on Wednesday. According to Susannah Streeter, Hargreaves Lansdown senior investment and markets analyst, Abrdn and Weir Group are contenders for promotion to the FTSE 100, while Harbour Energy and Dechra Pharma are set to drop down to the FTSE 250.

On Weir Group’s potential promotion, Streeter said: “It took the opportunity to refocus on mining during the pandemic, moving away from the oil industry. Its share performance has been a little volatile as worries about global growth and the ongoing effects of China’s zero-Covid policy have continued.

“However, optimism appears to be returning that its strategic move into mining will pay off over the longer term, and its recent results were resilient, showing strong demand from the sector for its equipment, with order numbers up by almost a fifth over the last quarter. Maintaining its full-year revenue and profit guidance is not to be sniffed at in the current market.”

Meanwhile, Harbour Energy has been “sideswiped” by the increased windfall tax announced in the autumn statement. The firm has also been hit by falling crude oil prices in recent days, with its share price tumbling by almost 30% in the last six months making it a firm candidate for relegation from the FTSE 100, Streeter added.

Changes will take effect after the close of business on Friday 16 December.

Thursday 1 December

– First-half results from Marlowe and James Latham
– Purchasing managers’ indices for manufacturing from Japan, Asia, the UK, the EU and USA
– OPEC meeting
– US Personal Consumption Expenditure index
– US car sales
– US weekly unemployment claims

Attentions are now turning to the next interest rate decisions from the US Federal Reserve and the Bank of England on 14 and 15 December. Key datasets that feed into these decisions are set to be released, starting with the Fed’s ‘beige book’ on Wednesday, before US labour and unemployment figures release on Thursday and Friday.

AJ Bell’s investment director Russ Mould and financial analyst Danni Hewson said: “If vacancies keep falling, unemployment starts rising and wage growth keeps flattening out, then the Fed could find itself with scope to start slowing its pace of interest rate increases and even pause or pivot on policy and halt rate hikes and then start cutting.

“That is what financial markets are looking and hoping for, anyway, as cheap money generally helps keep asset prices buoyant and more costly money tends to weigh on them. Weight stops trains, higher interest rates tend to stop share prices.”