IMF cuts global growth forecast as supply disruptions and inflation threaten recovery – business live | Business


A negative lead from Asia saw European markets open sharply lower earlier in the day, and although we have rebounded from lows, it is still difficult to determine an overall direction. Investors have ignored a slight drop in global growth for this year by the IMF, but no one is really paying attention to what these organizations have to say in the bigger picture.

The biggest laggards were core resources, which helped support yesterday’s FTSE100 gains. The problem facing investors right now is the bipolar nature of the day-to-day markets. Since July we have seen both upward and downward movements, but within a clearly definable range.

While investors want to believe a narrative that may see stock markets rise, any optimism is tempered by the prospect that rising prices, along with supply chain disruptions, may well have a negative impact on margins. beneficiaries, as well as causing a slowdown in consumption.

The main change since July has been a sell-off in bond markets, which has seen yields rise a bit, reflecting much higher inflation expectations over the next six to 12 months, and that will be the direction for companies in the future. over the next few months. that just might dictate where we go next.

Airlines were another drag today, with IAG and Ryanair in negative territory after easyJet reported annual loss of just over £ 1.1bn.

The numbers weren’t all bad, but today’s update also serves to illustrate the challenges the industry faces as we head into another fiscal year that is still likely to be affected by a pandemic. We have seen a decent rally from the lows this year, but the rebound has been somewhat limited with stocks roughly where they were at the start of this year.

Today’s update for the fourth quarter showed that the airline reached 58% of its capacity in 2019, with 17.3 million seats, which was slightly higher than what it expected in early September. and well above the 17% of the third quarter. Nonetheless, it is still slightly below the 60% it had hoped for in its first Q3 figures. A sign that it is more optimistic for its next fiscal year, it has raised its capacity forecast for the first quarter from 60% to 70% of 2019 levels.

The recent rights issue helped reduce its debt to £ 900million from £ 2bn, giving the airline a solid platform from which to build its resilience for its next financial year. With fuel prices rising, a significant headwind easyJet said it was 55% hedged for the year at $ 500 per metric tonne, with current spot prices currently being 50% higher.

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