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Nasdaq 100 futures extended their losses to 0.9%. S&P 500 futures fell 0.3%.On July 16th, Federated Hermes fund manager Karen Manna stated in a report that the firm continues to believe the Federal Reserve will remain largely on hold, while inflation remains one of the most difficult macroeconomic variables to predict. She noted that the shift from the low-inflation environment following the 2008-09 financial crisis to the post-pandemic surge in inflation was driven by supply chain disruptions, changing consumption patterns, and labor market imbalances. While many of these distortions have subsided, a host of new variables continue to cloud the inflation outlook. These include tariffs implemented last year, the period of reduced economic visibility before and after last falls government shutdown, high energy prices, and substantial capital expenditures related to artificial intelligence. "The result may be that the inflation pullback will be more uneven and phased than markets have experienced in previous cycles, reinforcing the Feds cautious and data-driven approach."On July 16th, Deutsche Bank analyst Sanjay Raja stated in a report that British Prime Minister Starmer will hand over a significantly improved British economy to his successor, Burnham. Data shows that the UKs GDP grew by 0.1% month-on-month in May, with a cumulative growth of 0.7% in the three months to May. Raja stated that based on the second-quarter economic performance, the UK is likely to continue to rank among the top G7 countries, or at least maintain a leading position. Looking ahead, he believes that the continued energy shock caused by the Iran war and geopolitical uncertainties may slow the UKs economic growth momentum. However, Raja noted that despite Englands defeat in the World Cup on Wednesday, the extended pub hours could still provide a brief boost to the UKs July GDP.On July 16th, Thomas Watts, an analyst at Julius Baer Bank, stated in a report that the latest UK economic growth data reflects the true state of the UK economy over the past two years – “There has been growth, but it has been hard-won and unevenly distributed.” He noted that while UK GDP grew by 0.1% month-on-month in May, this figure is somewhat “beautified.” Watts pointed out that the service sector was the only major driver of economic growth, growing by 0.3% in May; meanwhile, industrial production and construction both contracted. He stated that this serves as a reminder to the market that while the UK economy is still moving slowly, business confidence remains fragile. However, compared to the monthly data, the overall economic growth trend is more positive. In the three months to May, UK GDP grew by 0.7%. Watts added that the candidate who will succeed Reeves as Chancellor of the Exchequer (currently widely expected to be Shabana Mahmoud) should carefully manage this hard-won growth advantage.According to a Reuters poll, 52 out of 74 economists expect the European Central Bank to raise interest rates again in 2026.

According to Australian Retailer Woolworths, Inflation Is Driving Home Dining

Haiden Holmes

Feb 22, 2023 14:10

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Woolworths Group Ltd, a leading Australian retailer, said that an inflation-driven move away from dining out aided in boosting sales, driving its shares higher after its half-year earnings above expectations despite cost challenges.


Since COVID-19 lockdowns in 2020 prompted supermarket hoarding, Woolworths and its smaller competitor Coles Group (OTC:CLEGF) Ltd have witnessed significant fluctuations in Australian customer behavior. As lockdowns were lifted in 2021, and again in 2022, sales slowed as rising energy and labor costs pushed up shelf prices.


Woolworths said on Wednesday that cost-of-living constraints, including skyrocketing electricity prices and nine interest rate rises since May, are now beginning to benefit stores as consumers choose for in-home consumption.


Since the beginning of 2023, food sales have increased 6.5%, roughly in step with inflation, compared to just 2.4% in the six months leading up to the end of December, the business reported.


"The shift from eating in restaurants to eating at home has become more evident," said Chief Executive Brad Banducci to reporters.


He stated that a growing number of clients from all demographic groups are now preparing meals at home since eating out is becoming more expensive.


The company's net profit before significant items increased 14% to A$907 million ($622 million), above the Visible Alpha consensus estimate of A$877 million. The majority of the increase was attributable to employee back pay linked to a prior salaries miscalculation.


Similar to Tuesday's announcement of Coles' interim results, Woolworths' profit increase was aided by a dramatic drop in COVID-19-related expenditures.


At midday, Woolworths shares were up 2%, compared to a 0.3% decline in the overall index, as analysts hailed the potential of profit margin expansion at a business vulnerable to rising supplier prices.


Phillip Kimber, a retail analyst at E&P Financial, wrote in a client note, "The momentum in the core Australian Food industry remains strong, with sales growth rates above expectations in early 2H23."


Woolworths declared an interim dividend of 46 Australian cents per share, up from 39 Australian cents per share the previous year.

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