Markets wait for the Fed to lay out path as sticky inflation takes a bite out of Starbucks and Yum! Brands

“Sticky. That’s the word that’s become intrinsically linked with inflation, especially over on the other side of the Atlantic,” says Danni Hewson, Head of Financial Analysis at AJ Bell.

“At the start of the year those last few miles seemed so close, but the ground has become increasingly boggy and the finish line as distant as it’s ever been. The question is what the Fed can say to boost hopes when the data they’re working with is telling yesterday’s story and tomorrow’s fate might need to be re-written several times thanks to a few geopolitical plot twists.

“Today investors seemed to think that treading water was the best course of action, and even the optimism of the FTSE 100 was no match for the familiar weight of weary expectation.”

GSK

“GSK topped the blue-chip index risers after raising its profit forecast. Big pharma became even bigger business during Covid but four years on from those first lockdowns and companies are having to prove they’ve got more in the pipeline.

“GSK’s shingles treatment is just one of the therapeutic areas boosting performance even as Covid related treatments fall away.

“Living a long, healthy life has taken on new meaning for many of us and we expect nothing short of magic from our scientists.”

Starbucks / Yum! Brands

“Consumers have become hypersensitive to the impact of sticky inflation on their lives. They’ve drawn up budgets, then hastily redrawn them as prices on the things they used to regard as necessities became ‘nice to haves’ or ‘can totally do withouts’.

“Both Starbucks and Yum! Brands have felt the impact of those spending decisions from their consumers. Why splurge on a flavoured coffee beverage when you can brew a decent cup for a much keener price at home? Why pop out for a mid-week meal when the stocked freezer can be raided to feed the family at a fraction of the cost?

“Winning back customers in a highly saturated, increasingly competitive market will require clever marketing, smart pricing and sharp elbows.”

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