Gold pricing reached a new peak above $3500, alongside an 8.10% expansion in equity from Fresillo, a Mexican silver mining company incorporated in the UK which was one of the week’s high performers and infrastructural investment represents an effective counterpoise to gold contracts.
According to the Times, growth obstacles for UK listed companies comprising “tax rises, slowing wage growth and sticky inflation” are affecting several service providers.
Bunzl, for example, which sells PPE and sanitary equipment to healthcare and health and safety providers, as well as packaging, was poised to take advantage of new overseas markets as M&A revenue and adjusted operating profit for the year increased 7.9% with conversions indicated 3.1% revenue growth on an 8.3% operating margin.
In its annual report, Costain reported cash from operations in FY24 was £41.7mn, (FY23: 69.6mn), resulting from “increased operating profits offset by year-end timings of certain cash receipts at the end of year FY23 and FY24, together with some end of contract outflows in FY24.”
The company cited the “timing of year-end working capital” as well as “higher tax and capital expenditure payments” on investment in new systems and “higher cash flows on adjusting items”, although meeting the pension contribution deficit may have a detrimental effect on liquidity.
Inflation proxy indicators
Indeed, the CPI for July stood at 3.8%, up from 3.6% for June. The RPI, excluding the costing change in fuel and energy, was 4.8% for July, an increase from 4.4% yoy growth for June. The Producer Price Index (PPI) provides forward-looking outlooks of upcoming price increases based on slack vs actively engaged capacity, and acts as a measure of manufacturing inflation.
The Purchasing Manager Index (PMI) provides an indication of future orders and growth outlook based on forward-looking pricing on manufactures and services.
Trump’s foreign policy this month have not affected appetite for US 10-year Treasuries, which were stable as the return on Treasury bills, which must be held for 10 years until maturity, increased by 1bp from 4.27to 4.28.
The coupon paid out on UK 10-year gilts rose from a yield of 4.84 the preceding week to 4.90 correct as of 2 September, reflecting market speculation surrounding suggested tax cuts to be announced in the Budget on 26 November, which may contain a new wealth tax to meet the current spending shortfall.
Note that the Sentix Investor Sentiment Index, published today on forexfactory, was at -9.2 vs a forecast of -2.2; whereas the forecast for August was actually positive, and forward-looking analysts put the prediction at 6.2 where the actual value, predicated on a diffusion index based on surveyed investors and analysts, was -3.7.
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