Must read: US government shutdown, Greggs, UK house prices

GLOBAL MARKETS

On the first trading day of the fourth quarter, European markets are mixed to lower as the US government shutdown sparks risk-off sentiment.

The FTSE 100 is managing to eke out a modest gain after a boost to pharma stocks like AstraZeneca (LSE:AZN), Hikma Pharmaceuticals (LSE:HIK) and GSK (LSE:GSK) which are trading towards the top of the basket after President Trump launched plans for a website for consumers to buy drugs directly. This comes after the end of a strong third quarter for global equities with the Stoxx 600 up 3.5% and the S&P 500 logging its best September in 15 years.

• Invest with ii: Open a Stocks & Shares ISA | Top ISA Funds | Transfer your ISA to ii

In terms of data in the UK, the Nationwide house price index rose by 2.2% year-on-year in September, up from 2.1% in August and beating analysts’ expectations for 1.8%. The monthly reading hit 0.5%, also better-than-expected for 0.2%.

In the US, it is uncertain whether we will get Friday’s jobs report now as the Labour Department is preparing for the US government shutdown. This puts more focus on other labour data such as yesterday’s JOLTS figures which saw job openings in August hit 7.22 million, slightly better than forecasts. And focus will be on today’s ADP jobs data too. In other data, the latest Conference Board’s consumer confidence data hit 94.2, a five-month low in September, highlighting the weak consumer backdrop.

GREGGS

Greggs (LSE:GRG) reported third quarter total sales up 6.1% and like-for-like sales rose by 1.5%. It carried out 57 net new shop openings and expanded its Bake at Home range.

Greggs enjoyed an improvement in trading in August and September after ‘unusually high temperatures’ negatively impacted July. Its cost inflation outlook improved ‘marginally’ too.

The focus for Greggs in autumn is on the roll out of its ‘Big Deal’, a rival to Tesco’s meal deal. It offers customers a main, a drink and a side for just £5 and is likely to be very popular with its on-the-go working customers. It has also introduced other convenience options such as Egg Pots and Protein Shakes. Greggs is targeting at home customers too by expanding its ‘Bake at Home’ frozen to more supermarket stores like Iceland and Tesco (LSE:TSCO).

• Watch out for dividends from Aviva, Phoenix Group and M&G
• Sign up to our free newsletter for investment ideas, latest news and award-winning analysis

Greggs has demonstrated its ability to navigate a challenging environment by appealing to on-the-go working customers looking for a cheap and cheerful varied menu of hot and cold options. It has been expanding its store estate, keeping a lid on costs, and is constantly innovating with new ideas to either get customers through the doors or bring Greggs to people’s homes.

Today’s stock market rally comes as a welcome break for Greggs’ investors. The stock is up around 5% this morning, but shares are still down around 40% year-to-date, reflecting the recent slowdown in sales growth hit by the sluggish macroeconomic backdrop, high cost inflation, and unpredictable UK weather.