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UK companies rein in spending and hiring; Ryanair reports further losses; Nissan funding in question.

UK companies rein in spending and hiring; Ryanair reports further losses; Nissan funding in question.

5 February 2019

The Weekly Note is brought to you by the ALPHA : r² discretionary service team.

Market news

European equity markets are rising strongly today following better-than-expected composite Purchasing Managers’ Index (PMI) data, which crucially avoided contraction as some had feared.

The service sector indicator for Italy, however, underwhelmed, adding to a growing list of signals which point to an Italian recession. France’s composite PMI fell to its lowest mark in over four years.

The S&P 500 notched its fourth successive gain yesterday and the FTSE 100 is over 100 points higher this morning. Most of Asia is closed for the Lunar New Year festivities, contributing to the relatively low level of macroeconomic news this week. There is some focus on America’s Federal Reserve, which said it would remain data-led, but little appears to have changed between the US and China, who are still said to be far from agreeing terms for a trade deal.

Sterling has softened versus the dollar over the last few days amid some weak business activity figures. The latest PMI data for services, which represent 70% of the UK economy, came in at a two-and-a-half year low following some stagnation so far in 2019. It revealed a decline in incoming new work for the first time since 2016.

Brexit-induced uncertainty has increased aggregate risk aversion and companies’ propensity to delay investment decisions, as further evidenced by a Deloitte report this week. The survey of finance chiefs revealed that companies are reining in spending and hiring plans more sharply than at any time for nine years.

The latest developments in the Brexit negotiations is that the EU’s most senior civil servant offered Britain a legal guarantee that the Irish backstop agreement would not be permanent, but Brexiteer MPs immediately rejected the proposal. Meanwhile, Theresa May is in Northern Ireland today to try and reassure the country that a hard border with Ireland can avoided.


Economic data*

Share Closing Values at 14/1/19 Year high Year low
FTSE 100 7,034 7,904 6,537
FTSEurofirst 1,415 1,560 1,291
DAX 11,177 13,204 10,279
DJ Industrial Average 25,239 26,952 21,713
S&P 500 2,725 2,931 2,351
NASDAQ 7,348 8,133 6,190
Hang Seng 27,990 31,978 24,541


UK Gifts % Yield Price
10 Year 1.28 103.16
2 Year 0.78 101.76
5 Year 0.91 99.29

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