The UK stock market continued its recovery from the big falls seen at the end of last week and beginning of this week amid some solid corporate updates and strong trading in Asia and on Wall Street.
Like several of its rivals NatWest smashed forecasts but for investors the focus is much more on the outlook, which despite the boost to profit implied by rising interest rates, is heavily clouded by the risk of an increase in bad debts linked to the cost-of-living crisis.
“Households are under such severe financial pressure that it seems almost inevitable that some of the bank’s customers will get into difficulty,” said AJ Bell’s Russ Mould.
“While Covid continues to affect millions, perhaps even billions of people around the world, AstraZeneca’s forecast for a big decline in demand for its vaccine suggests that while the pandemic is not over, we are moving into a new phase.
“Elsewhere the pharmaceutical giant, which was almost an accidental participant in the Covid vaccine battle, reported revenue a touch ahead of expectations and outlined plans to keep innovating with the opening of a new research and development site in the US slated for 2026.
“Online white goods seller AO World saw lots of demand during the pandemic but that has now begun to dry up, supply chain issues are dogging the company and the deterioration in consumers’ finances means order cancellations are going up.
“Worst of all for the company’s credibility, full year results are set to be delayed because of a strategic review of its German business. This is never taken as a good sign by the market.
“The most encouraging takeaway from building materials supplier Travis Perkins was its apparent ability to pass on an increase in raw material costs amid strong demand for housing. Crucially while prices are still high, the supply chain issues which affected the sector throughout 2021 are beginning to ease.”
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