British stocks faced a setback on Tuesday, with the FTSE 100 index declining by 0.86% at the close of trading. Investors remain cautious as they await macroeconomic data potentially influencing global monetary policy paths. All eyes are on the upcoming US inflation data for November, which is set to be released on Wednesday.
Market expectations suggest an annual inflation rate increase to 2.7%, up from the previous month's 2.6%. Analysts also anticipate that the US Federal Reserve will consider further interest rate cuts on December 18. "Moving forward, however, the ongoing resilience in the labor market and the broader economy, alongside sustained price pressures that have remained relatively stable over the past several months, should prompt a policy pause sooner rather than later as we transition into 2025.
While evolving conditions may justify a softer policy stance and additional rate cuts over the next 12 months, it's crucial that the approach remains cautious and controlled," stated Stifel. Meanwhile, domestic economic indicators are set to be released soon, with the October gross domestic product expected on Friday.
Analysts forecast a monthly increase of 0.2%, following a 0.1% contraction in September. This data could significantly influence the Bank of England's decision regarding interest rates at their upcoming meeting, with experts predicting a pause in rate hikes. In corporate developments, shares of Ashtead Group saw a dramatic plunge of 14.03% during Tuesday’s close, largely attributed to a downward revision in its rental revenue forecast for fiscal 2025 and the announcement of its plans to shift its primary listing from London to New York. Despite recent challenges, RBC Capital Markets maintained its stance, suggesting it may be premature to upgrade Ashtead to an outperform rating.
They continue to view the company’s stock as positioned to benefit from a stable improvement in the supply-demand dynamics. Analysts further assert that favorable growth prospects for the US economy could spur revitalized construction activity, potentially enhancing earnings momentum for Ashtead following a year of disappointing performance..