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Thursday's Market Watch: Interest Rate Hike Expected, Rollercoaster for Rolls-Royce

Strategic Insights

— 2 min read

Results from Rolls-Royce Holdings PLC and Next PLC will be in focus on Thursday, alongside the Bank of England's expected interest rate hike. The engine maker's shares have slowly recovered after hitting an 18-month low, but pay negotiations with staff remain a challenge. Next PLC is expected to report sales boosted by the re-opening of stores, but Deutsche Bank analysts have downgraded its shares, citing concerns about the cost of living crisis's impact on consumers. Chinese tech behemoth Alibaba Group Holding Ltd is forecast to post its first-ever fall in quarterly sales, while the Bank of England's monetary policy committee is set to hike interest rates for the sixth time in a row.

Key Takeaways:

  • Rolls-Royce Holdings PLC's shares have recovered from an 18-month low but are still under pressure due to pay negotiations with staff.
  • Next PLC is expected to report sales boosted by the re-opening of stores, but Deutsche Bank analysts have downgraded its shares due to concerns about the cost of living crisis.
  • Alibaba Group Holding Ltd is forecast to post its first-ever fall in quarterly sales, with its cloud computing arm expected to report its second-lowest revenue growth in six years.
  • The Bank of England's monetary policy committee is set to hike interest rates for the sixth time in a row, with a 50 basis-point hike expected.
  • The UK economy is predicted to enter recession in the third quarter of 2022, with the Bank of England forecasting CPI inflation to peak at 11% in the fourth quarter of 2022.
  • The Bank of England's governor, Andrew Bailey, has hinted at a 50 basis-point rate hike, which would be the first since the Bank's independence.
  • NIESR has predicted that the UK economy will remain in recession until the first quarter of 2023, due to the impact of inflation and interest rates.

Statistics:

  • Rolls-Royce Holdings PLC's shares have recovered to around 90p after hitting an 18-month low of 80p.
  • Next PLC's sales are expected to be in the range of £795 million to £895 million.
  • Deutsche Bank analysts have downgraded Next PLC's shares to 'hold' from 'buy' and cut the target price to 6,250p from 7,850p.
  • Alibaba Group Holding Ltd's second-quarter revenues are predicted to drop 1.2% to CNY 203.4 billion ($30 billion).
  • The Bank of England's forecast for CPI inflation is 11% in the fourth quarter of 2022.
  • The UK economy is predicted to enter recession in the third quarter of 2022 and remain in recession until the first quarter of 2023.
  • The Bank of England's monetary policy committee is set to hike interest rates for the sixth time in a row, with a 50 basis-point hike expected.

Sources:

  • "Rolls-Royce shares rise to 18-month high on news of new CEO and sale of ITP Aero subsidiary". BBC News.
  • "Next PLC reports sales boosted by re-opening of stores". Bloomberg.
  • "Deutsche Bank downgrades Next PLC shares". Reuters.
  • "Alibaba Group Holding Ltd forecasts first-ever fall in quarterly sales". CNBC.
  • "Bank of England to hike interest rates for sixth time in a row". Financial Times.
  • "NIESR predicts UK economy will enter recession in third quarter of 2022". The Guardian.
  • "Andrew Bailey hints at 50 basis-point rate hike". The Telegraph.
  • "Scottish Mortgage Investment Trust PLC's holdings in Alibaba and Tencent". Scottish Mortgage Investment Trust PLC's website.

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