ConsumerWatch – Don’t look down

A relatively stable macroeconomic environment and modest cuts to interest rates appear to have stimulated investor interest in the sector, with outperformance versus the UK market in Q324 for the first time this year and continued outperformance versus the North American market. There was an element of looking towards better times as overall profit estimates continued to decline in the quarter. Indeed, we hear plenty of companies talking about economic indicators that point to better trading ahead, even if current trading remains subdued. We were a little disappointed to see the reversion to more downgrades than upgrades at the individual company level in Q324. The current quarter is an important time for many companies from a trading perspective. It also includes two significant upcoming events, which appear to have recently negatively affected consumer confidence in the UK and US: the first budget from the Labour government in the UK at the end of October and the US presidential election at the start of November. It is going to be an interesting quarter.