LONDON MARKETS: FTSE 100 Edges Lower As Pound Climbs After Strong Retail Sales Data
May 24 2018 - 6:03AM
Dow Jones News
By Sara Sjolin, MarketWatch
Pound rebounds from 2018 low
U.K. stocks tipped lower on Thursday after the pound rallied on
the back of better-than-expected retail sales data that brought an
August Bank of England interest rate rise back into play.
What are markets doing?
The FTSE 100 index fell 0.1% to 7,784.19, adding to a 1.1% loss
from Wednesday.
The pound climbed to $1.3396 from $1.3348 late Wednesday in New
York. Sterling fell to a fresh 2018 low on Wednesday, after
official figures showed U.K. inflation unexpectedly fell in April,
seen as dampening expectations for a Bank of England interest rate
rise in the summer.
What is driving the market?
However on Thursday, the retail sales data painted a more upbeat
picture of the U.K. economy and suggested the economy may be able
to stomach a rate hike this summer. Retail sales rose 1.6%
month-on-month in April
(http://www.marketwatch.com/story/uk-retail-sales-rebound-from-bad-weather-2018-05-24),
beating forecasts of a 0.2% rise, recovering after a spell of cold
weather.
Investors in the U.K. are watching data releases closely, after
BOE Governor Mark Carney made clear recently that the central
bank's next policy move depends on an improvement in British
economic health.
More broadly, traders were still digesting the minutes from the
U.S. Federal Reserve's May 1-2 meeting, which were released late
Wednesday. The minutes suggest
(http://www.marketwatch.com/story/fed-minutes-show-support-for-june-hike-and-calm-about-inflation-outlook-2018-05-23)
the U.S. central bank is on track to hike interest rates in June
and is keeping calm about the inflation outlook.
Check out:How stock-market investors could be surprised by a
peak in interest rates
(http://www.marketwatch.com/story/heres-how-stock-market-investors-could-be-surprised-by-a-peak-in-rates-2018-05-23)
Staying in the U.S., President Donald Trump rekindled concerns
of a global trade war, announcing an investigation that could lead
to import tariffs on cars
(http://www.marketwatch.com/story/trump-administration-mulls-tariffs-of-up-to-25-on-imported-autos-2018-05-23).
What are strategists saying?
"The pound was buoyed this morning as retails sales beat
expectations across the board. This is a small reprieve for Mark
Carney at the Bank of England, who has insisted that the dip in Q1
GDP was temporary, and that the fundamentals for the U.K. economy
could bounce back and move the central bank closer to an interest
rate hike. This morning's retail figures indicate this could
happen," said Hamish Muress, currency analyst at OFX, in a
note.
"This bounce for sterling contrasts with yesterday's decline and
shows how the currency is currently trading on the release of every
piece of economic data as it tries to judge how the economy is
performing," he added.
Stock movers
Shares of Tate & Lyle PLC (TATE.LN) rose 4.5% after the food
ingredients maker said adjusted profit rose 13%
(http://www.marketwatch.com/story/tate-lyle-profit-rises-plans-100-mln-cost-cuts-2018-05-24)
in the last fiscal year.
Kingfisher PLC (KGF.LN) rose 1.3% even after the do-it-yourself
retailer
(http://www.marketwatch.com/story/kingfisher-sales-drop-as-cold-hits-footfall-2018-05-24)
said first-quarter sales fell due to bad weather.
Shares of Daily Mail & General Trust PLC (DMGT.LN) lost 6.5%
after the newspaper publisher reported a drop in revenue in the
first half of fiscal 2018
(http://www.marketwatch.com/story/daily-mail-general-trust-pretax-profit-jumps-2018-05-24).
Mediclinic International PLC (MDC.LN) lost 5.9% after the health
care group said it swung to a full-year pretax loss
(http://www.marketwatch.com/story/mediclinic-swings-to-loss-on-swiss-related-charges-2018-05-24)
due to one-time charges related to its Switzerland business and
intangible assets.
United Utilities Group PLC (UU.LN) gave up 2.3% after reporting
a 2.4% fall in fiscal 2018 pretax profit
(http://www.marketwatch.com/story/united-utilities-pretax-profit-slips-in-2018-2018-05-24).
(END) Dow Jones Newswires
May 24, 2018 05:48 ET (09:48 GMT)
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