We\u2019re into Q4 2023, and the interest-rate hiking campaign that has persisted since December 2021 appears to have finally ceased.<\/p>\n
Bank of England governor Andrew Bailey\u2019s announcement that interest rates will remain unchanged at 5.25% for the foreseeable future means that borrowing costs will remain fixed until inflation is suitably low.<\/p>\n
While still considerably higher than the 2% target, CPI inflation has fallen to 6.7% from the high of 11.1% seen in October 2022.<\/p>\n
UK companies must now contend with the Bank of England\u2019s balancing act of maintaining the highest borrowing costs in 15 years without the economy slipping into recession.<\/p>\n
Bailey says that UK growth will remain \u2018well below historical averages\u2019 over the medium-run, even as inflation persists. However, revised economic data from the Office for National Statistics shows that the UK has experienced faster growth than both France and Germany since the end of 2019.<\/p>\n
This means that GDP is now estimated to be 1.8% above the pre-Covid period \u2014 compared to a previous estimate of a 0.2% contraction. In addition, the economy expanded by 0.3% in Q1 2023, up from the previous estimate of 0.1%.<\/p>\n
With companies fresh off the back of their Q3 trading updates, it remains to be seen which firms will see out the year-end on a positive note, though past performance is not an indicator of future results. But for now, here are three of the best UK shares to watch \u2014 all of which have featured in recent news.<\/p>\n
Top UK shares to watch
\nSainsbury\u2019s<\/p>\n
Sainsbury’s<\/a> shares rose almost 4% last week after its interim results revealed robust half-year trading figures.<\/p>\n Its grocery sales were up 10.1% across both quarters as the supermarket aims to compete with budget retailers ALDI and Lidl. The strategy is paying off \u2013 with Sainsbury\u2019s the only supermarket gaining market share on its competitors.<\/p>\n Sainsbury\u2019s also reported retail-free cash flow of \u00a3520 million and a net debt reduction of \u00a3701 million, falling to a total of \u00a35.6 billion. Its interim dividend remains unchanged at 3.9 pence per share.<\/p>\n And CEO Simon Roberts was bullish on the retailer\u2019s prospects as it approaches Christmas, by far the industry\u2019s busiest period.<\/p>\n \u2018We\u2019re helping everyone to treat themselves with fantastic value and more delicious new food than ever before. As we head into this key trading period, we are encouraged by our strong momentum and we remain fully focused on delivering for customers and shareholders.\u2019<\/p>\n On this momentum, Sainsbury\u2019s announced it was expecting underlying profit before tax to reach between \u00a3670 million and \u00a3700 million by year-end, with retail free cash flow of at least \u00a3600 million \u2013 20% higher than previous guidance.<\/p>\n Next<\/p>\n Clothes retailer Next<\/a> issued a brief but optimistic trading update last week \u2013 announcing its fourth upgraded full-year profit forecast in the last six months.<\/p>\n Its shares rose 3.6% upon the company\u2019s positive first-half results and are up over 40% this year, while the FTSE has gained just 2% over the period.<\/p>\n Sales from August to October were 4% higher than the same period of last year and 2% above the retailer\u2019s target.<\/p>\n Next offered a somewhat unconventional reason for its uplifted guidance \u2013 the sun.<\/p>\n \u2018We believe the volatility in sales performance is a result of changing weather conditions rather than any underlying changes in the consumer economy,\u2019 it said in the update.<\/p>\n \u2018In an autumn season cooler weather is good for sales, warmer than average weather depresses sales. Over time, the average performance is a better indicator of underlying consumer demand than any one week.\u2019<\/p>\n Indeed, it seems to be shielding against the wider sectoral downturn amid softening demand for consumer goods.<\/p>\n The firm upgraded its profit forecast by \u00a310 million to \u00a3885 million at the year-end and announced an exceptional gain of \u00a3110 million, which is excluded from the figures, thanks to increasing its equity stake in Reiss, another fashion retailer.<\/p>\n Not just Reiss, however: last month, Next acquired FatFace for \u00a3115 million \u2013 though the effects on its earnings will not be seen until next year.<\/p>\n Rentokil<\/p>\n Rentokil<\/a> shares fell by almost 20% on Thursday 19 October, from 595p to 484p upon the release of its third-quarter trading update.<\/p>\n The pest controller\u2019s results were mostly positive, but weaker consumer demand in the US, where roughly half of its sales originate, dragged on earnings.<\/p>\n However, its results were perhaps not as disastrous as the share price fall suggests.<\/p>\n Revenue in North America may have grown just 2.2% year-on-year, but a 9.5% growth in Europe and Latin America was more robust, coupled with an 8.9% growth in Asia, the Middle East and North Africa.<\/p>\n Total revenue jumped 53% over the year from \u00a3901 million to \u00a31.38 billion, suggesting the year was not as bleak as the market\u2019s reaction.<\/p>\n Despite the fall, CEO Andy Ransom said Rentokil was making good progress on its transformation journey after having acquired US rival Terminix in 2021.<\/p>\n \u2018The Group delivered a good overall performance in the third quarter. We have a proven, effective strategy to deliver organic growth, focused on strong customer relationships and service quality,\u2019 he said in the report.<\/p>\n \u2018In addition, the portfolio effect of our global business operating in multiple markets enables us to weather regional headwinds.\u2019<\/p>\n The bedbug infestation across France and other nations could lead to a Q4 revenue boost as the firm tackles the influx of creatures across its European market.<\/p>\n Until now, Rentokil shares have enjoyed strong returns \u2013 having risen 90% over the past five years before the Q3 release sent prices tumbling.<\/p>\n As of last week, Rentokil shares are trading at their lowest level since the start of the coronavirus pandemic, which could appeal to investors seeking to take advantage of the share price discount caused by its Q3 update.<\/p>\n Trade and invest in over 17,000 UK, US and global shares from zero commission with us, the UK\u2019s No.1 trading provider.* Learn more about trading or investing in shares<\/a> with us, or open an account<\/a> to get started today.<\/p>\n *Based on revenue excluding FX (published financial statements, October 2021).<\/p>\n","protected":false},"excerpt":{"rendered":"We\u2019re into Q4 2023, and the interest-rate hiking campaign that has persisted since December 2021 appears to have…\n","protected":false},"author":2,"featured_media":454329,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[3091],"tags":[51,2441,16,15],"class_list":{"0":"post-456992","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-markets","8":"tag-business","9":"tag-markets","10":"tag-uk","11":"tag-united-kingdom"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@uk\/115279960671264554","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/456992","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/comments?post=456992"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/posts\/456992\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media\/454329"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/media?parent=456992"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/categories?post=456992"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/uk\/wp-json\/wp\/v2\/tags?post=456992"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}