29 January 2019
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The FTSE 100 is trading over 100 points higher this morning, up 1.5% and more than reversing yesterday’s sharp losses. European equity markets are also mostly higher, despite losses in Asia and on Wall Street overnight.
There is global focus on high-level trade talks between the US and China taking place tomorrow. Trump is under pressure to strike a deal, but the White House filed criminal charges against Huawei, the Chinese technology giant, for stealing trade secrets and violating sanctions against Iran. Investors hope the talks can still turn a temporary truce into a permanent agreement.
Despite official figures showing that China’s GDP slowdown is being carefully controlled as promised, sentiment soured yesterday after two American companies with significant business in China warned of deteriorating outlooks for its economy.
Last week, equity markets were mixed. The US government reopened after its longest-ever shutdown and there was a strong start to Q4 earnings, with three-quarters of US companies surprising to the upside, but disappointing global data relating to growth, trade and sentiment.
Sterling rose against the dollar last week in spite of the uncertainty surrounding Brexit progress, as speculators deemed that Prime Minister Theresa May’s waning authority might lead to a softer Brexit and a potential extension of the negotiating timeframe. Yesterday, the European Research Group refused to back an amendment that could have saved May’s deal and failure in the vote tonight could lead to parliament effectively taking control of Brexit.
It has emerged this morning that hard-line Brexit and Remain supporters within the Conservative party have privately reached a compromise. Leaks suggest that it includes a longer transition period and replaces the Irish backstop with a “safety net” that is more palatable to Brexiteers.
Oil, meanwhile, has benefitted this month from a weaker dollar and the prospect of Chinese fiscal stimulus, leaving Brent crude oil back above $60 a barrel today. Sanctions placed on Venezuela have also applied supply-side pressure.
|Share||Closing Values at 14/1/19||Year high||Year low|
|DJ Industrial Average||24,528||26,952||21,713|
|UK Gifts||% Yield||Price|
|FOREX versus US Dollar||Last||% Change**|
|Commodities||Price (USD)||Change**||% Change**|
|Brent Crude Oil||59.93||-0.44||0.73|
A bleak few days for the UK retail industry have put thousands of jobs at risk. Yesterday, Tesco confirmed that it is cutting 9,000 jobs in its stores, with fresh food counters being removed from some locations. The supermarket said that customers are visiting the counters less frequently because they have less time to shop.
It also emerged yesterday that the owner of the Oddbins off-licence chain is on the verge of collapse. Oddbins has collapsed once already, under previous ownership in 2011. European Food Brokers, the parent company, has blamed tough high-street conditions and Brexit uncertainty.
Meanwhile Paperchase is being offered to potential buyers as its owner holds talks with landlords. Paperchase has suffered as high-street footfall has declined and The Times reports that, for a number of its stores, it has sent a restructuring proposal suggesting a new rental agreement linked to turnover.
Domino’s Pizza Group, on the other hand, enjoyed strong performance in the UK over Christmas, but had to cut its profit guidance due to weaker performance overseas. UK sales during the Christmas period rose by 5.5% helped by a record day when it sold 12 pizzas a second. International sales fell by 2% in the same period.
Hargreaves Lansdown suffered a 24% drop in new business during the second half of last year, while total assets fell 6% to £85.9bn. Its shares are down c.5% at time of writing, the worst performing in the FTSE 100. It blamed weak investor confidence and market volatility for the downturn.
Ocado’s shares rose yesterday after reports emerged that Marks & Spencer could take over its food delivery services. Shares in M&S also rose, but other rival supermarkets saw prices move in the other direction. M&S currently lacks the delivery network that its major rivals possess.
|Date||Category||Country||Event||Reuters poll||Prior estimate|
|29/01/19||Surveys & Cyclical||France||
France-Consumer confidence - Consumer Confidence
|29/01/19||Surveys & Cyclical||United States||
United States-Consumer confidence - Consumer Confidence
Japan-Retail Sales - Retail Sales YY
Germany-Import Prices - Import Prices YY
|30/01/19||Government Sector||United Kingdom||
United Kingdom-Consumer Credit - Mortgage Approvals
|30/01/19||Surveys & Cyclical||Eurozone||
Euro Zone-Sentiment - Consumer Confid. Final
Germany-Inflation Prelim - CPI Prelim YY
United States-GDP Advance - Core PCE Prices
|31/01/19||Surveys & Cyclical||United Kingdom||
United Kingdom-GfK consumer confidence - GfK Consumer Confidence
Euro Zone-Unemployment - Unemployment Rate
|01/02/19||Surveys & Cyclical||United Kingdom||
United Kingdom-PMI Manuf - Markit/CIPS Mfg PMI
|01/02/19||Labour Market||United States||
United States-Employment - Unemployment Rate
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