Federal Reserve Chair Jerome Powell made it clear on Wednesday that the central bank is close to done raising interest rates but indicated that borrowing costs are likely to remain higher for longer amid renewed strength in the economy. The so-called “dot plots” indicate that the Fed still expects to raise rates once more this year, but that is marginal. Projections also show that they expect inflation to fall below 3% next year and return to their 2% target by 2026.

European and Asian stocks fell with US futures after the Fed decision. Treasuries also dropped. Traders are bracing for higher yields on indications the Fed will likely hold rates at lofty levels well into 2024. The dollar rallied against major currencies except the yen, after Japan's top spokesman warned against excessive moves. Brent dipped.

The BOE is set to decide whether to call a halt to its string of 14 consecutive rate hikes. Investors have fully priced in one more 25-bp increase this year, but yesterday's news that UK inflation fell to an 18-month low raised questions over whether the hike will come today. Any pause would mirror the Fed's decision to keep rates unchanged, while signalling borrowing costs will probably stay higher for longer after one more hike this year.

Ukraine: Poland said it has stopped supplying weapons to Kyiv, further escalating a dispute over grain exports. Warsaw won't interfere with arms shipments from other countries, said PM Mateusz Morawiecki. Separately, Volodymyr Zelenskiy is said to have met with billionaires including Ken Griffin and Bill Ackman in New York to discuss using private-sector funds to help rebuild the country.

More central banks: The SNB, Riksbank and Norges Bank are seen hiking by 25 bps today, while Turkey is forecast to raise by 500 bps. The SARB is expected to hold.

Joe Biden offered Benjamin Netanyahu a long-awaited invitation to the White House. The Israeli PM expressed confidence that Israel can reach a landmark normalization agreement with Saudi Arabia and Crown Prince Mohammed bin Salman echoed his sentiments. Israeli officials are working with the Biden administration on a plan to set up a U.S.-run uranium-enrichment operation in Saudi Arabia, the WSJ reported.

Halma – Trading Update

Halma has today released a trading update covering the six months to 30 September 2023.

In response, the shares were trading down by around 1.6%.

Halma is a global group of life-saving technology companies, with a focus on safety, health, and the environment. The group’s technology is used to save lives, prevent injuries, and protect people and assets across a broad range of sectors including commercial and public buildings, utilities, healthcare/medical, science/environment, process industries, and energy/resources. The main growth drivers include increasing health and safety regulation, demand for healthcare from an ageing population, and demand for life-critical resources. Strong market positions deliver upgrade and replacement sales opportunities as customers seek to maintain regulatory compliance and conform with best practice. As a result, customer spending is often non-discretionary and drives sustained demand throughout the economic cycle.

In the update the company said that they had made further progress in the first half and left their guidance unchanged for the full year. Guidance for the full year to March 2024 is for good organic constant currency revenue growth and return on sales of approximately 20%. This is unchanged from that given in their results announcement in June. They expect the balance of revenue and adjusted profit before taxation between the first and second half of this financial year to be in line with pre-COVID historical averages. Accordingly, in the first half of the year, they expect good organic constant
currency revenue growth against a strong comparative period last year and return on sales towards the lower end of the target range. Cash performance is enabling continued investment, both organically and in acquisitions, to expand opportunities for growth over the medium to longer term.

Revenue by sector on an organic constant currency basis reflects order book trends, with stronger growth in the Safety and Environmental & Analysis sectors, and similar revenue to the first half of last year in the Healthcare sector. All sectors will benefit from recent acquisitions. Return on sales in the Safety and Healthcare sectors is expected to be higher in the first half of the year, relative to the comparable period last year. The Environmental & Analysis sector's first half Return on Sales is
expected to be lower due to mix effects. By geography, the USA and Mainland Europe have delivered strong organic constant currency revenue growth, while the UK has grown modestly; together, these account for nearly 80% of Group revenue. Organic constant currency revenue performance in Asia Pacific was negative, reflecting declines in China, partially offset by a strong performance in Australasia.

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