US markets posted their biggest one-day gain in two years yesterday with the S&P 500 index surging 5.5% and the technology heavy Nasdaq rising a whopping 7.4% after consumer price inflation for October came in lower than expected.
Despite many months of higher-than-expected inflation, investors have been fixated on anticipating a Fed ‘pivot’ and yesterday’s inflation print could give the US central bank reason to temper the pace of rate hikes.
One casualty of the ‘good’ inflation news was the US dollar which lost around 2% against major currencies including the pound, which held back gains in the blue-chip FTSE 100 while the domestically focused FTSE 250 gained 1.6%.
Also fading into the background are the traditional defensive defensive sectors such as Tobacco and Healthcare, while more speculative names are flying higher.
UK STOCKS HITTING 52 WEEK HIGHS
If sentiment has turned and for the better, it could herald an early Santa rally. But which names might lead the charge?
Stocks hitting fresh 52-week highs could be a good hunting ground to find the winners. Newspaper distributer Smiths News (SNWS) continues to deliver good news after reporting (9 Nov) better than expected full-year results.
Strong cash flow allowed the firm to significantly reduce bank debt and increase the dividend by 151% to 4.15p per share which is over two-times covered by earnings.
Even after the strong 30% gain over the last month, the shares still offer almost a 10% yield at the current price of 43p.
With China slowly peeling back its strict Covid-19 restrictions amid speculation it will remove its zero-Covid policy altogether after Chinese New Year, luxury goods companies look well placed.
So, its not surprising to see luxury fashion brand Burberry (BRBY) closing in on new 52-week highs. Analysts have been increasing their earnings forecast all year, supporting the shares which gained 3% to £22.10 on Friday.
Perhaps surprisingly, retail banking group Bank of Georgia (BGEO:AIM) keeps hitting 52 week highs. Since the Ukraine war started the shares have risen 2.5 times to the current £25.05.
The company reported (10 Nov) a 56% increase in third quarter earnings after a stronger-than-expected macroeconomic performance on the first nine months of 2022.
Shares in multi-utilities provider Telecom Plus (TEP:AIM) continue to hit 52-week highs following upbeat full-year results (3 Oct) which were materially ahead of market expectations.
The company, which offers insurance, broadband and energy services under the Utility Warehouse brand, said customers were drawn in as they looked to save on their bills.
An annualised growth rate in customer numbers of 24%, with a total customer base of 814,684, is in line with the internal target to add one million additional customers in the next four to five years.
Other companies making new 52-week highs include pawnbroker H&T (HAT:AIM) and insurance firm Hiscox (HSX).
