Key Takeaway: Moody's downgraded Southern Water to junk status , citing financial and operational underperformance, compounding the broader issues facing the UK water sector. Southern Water Ltd’s credit rating was downgraded to junk by Moody’s , with a warning of potential further cuts due to its weak performance history and financial challenges. This downgrade impacts the company’s ability to raise the £4 billion in new debt and £650 million in equity required for its capital plans. The UK water industry is facing heightened scrutiny due to concerns over chronic leaks, sewage spills, and high-interest rates. Southern Water, which supplies over two million people in England, could face severe penalties from the regulator Ofwat , which may limit funds for essential upgrades. Following the downgrade, Southern Water’s 2026 bonds dropped 2.7 pence to around 85 pence on the pound. Despite the rating cut, Southern Water assured customers that services would continue unaffected, hig
Key Takeaway: Investors are cautious about further gains in the S&P 500 despite expectations of a Fed rate cut in December, driven by inflation data that met forecasts.
US stocks faltered late Wednesday as investors grew cautious about extending the post-election rally. The S&P 500 was flat, while the Nasdaq 100 fell 0.2%, and the Dow Jones gained 0.1%. Although the CPI data matched estimates, suggesting inflation may ease further, traders questioned whether stocks had rallied too quickly after the election.
With Fed rate cuts expected, markets priced in an 80% chance of a December rate cut, based on inflation trends. Yet caution lingers, with some investors wary of future rate hikes to counter new fiscal stimulus. Bond yields also saw mixed movements, with 10-year Treasuries rising to 4.45%, reflecting longer-term inflation concerns.
Market Sentiment:
- "Investors are bracing for a potential pullback," noted Bret Kenwell at eToro. Despite "buy-the-dip" mentality, any sell-off is expected to be shallow.
- Technology stocks remain a key focus as Nvidia’s upcoming earnings could drive significant market moves, especially with investor excitement around AI advancements.
Outlook:
Fed Chair Jerome Powell has kept rate paths open, emphasizing that the economy’s resilience allows time for gradual rate adjustments. However, some analysts, including those at Capital Economics, expect Treasury yields to climb further, and Goldman Sachs Asset Management warns of a slower pace of cuts as policy uncertainties loom in the new year.
In summary, while December remains likely for a rate cut, the market faces mixed signals, with inflation challenges and economic strength driving a cautious outlook on sustained stock gains.
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