Terling continues to trade at its lowest level since December after stagflation fears triggered by the recent surge in energy prices helped accelerate the flight to the US dollar.
The pound is now at 1.34 against the greenback, with the US currency increasingly seen as a safe haven for investors worried about recent economic developments.
Pressure on the pound eases
The British pound is recovering from its recent lows after a massive sell off in recent days.
The pound is up 0.4% against the dollar at $ 1.3481 and 0.5% against the euro at â¬ 1.1634. The currency is helped today by better than expected GDP figures this morning.
Deutsche Bank today raised its forecast for UK GDP growth to 7.1% this year. However, the bank cut its growth forecast for next year, saying it now sees only 3.6% growth, down from an earlier estimate of a 5% expansion.
Despite today’s rally, the pound is still down about 1.5% from its level at the start of the week.
Slightly higher FTSE at lunchtime
The FTSE 100 is up 11 points, or 0.1%, as of noon at 7119.
The index is supported by commodities stocks, with Anglo American and Evraz both leading the index with gains of over 2%. Diageo is not far behind after an optimistic statement at the AGM.
Managing Director Ivan Menezes told investors that FTSE 100 is seeing its North American business “performing well, despite some supply chain constraints.”
Menezes expects organic operating margin to benefit from further sales recovery.
Fashion company H&M announces improved sales
Fashion firm H&M said sales in September improved from the previous month, although disruptions and delays hit some products.
The Stockholm-based retailer said this month’s sales were “slightly higher” in local currencies.
The growth came “even though demand could not be fully met due to disruptions and delays in the flow of products.”
H&M provided an update when releasing third quarter results as of August 31, which showed the group’s sales in local currencies were up 14% from the same period last year. Online sales jumped 22% and gross margin increased 19%.
FirstGroup dives despite US funding from Greyhound
Shares of transport operator FirstGroup fell 1% despite new funding in the United States.
FirstGroup’s long-haul bus company Greyhound has secured an $ 84.6 million grant from the US Treasury Department’s Coronavirus Economic Assistance for Transportation Services (‘CERTS’) program. Funding can be used to keep major transportation companies in business and can be spent on payroll and things like maintenance.
âAs previously reported, Greyhound remains a non-core part of the group and the board continues to research all exit options for the company with ongoing sales discussions,â FirstGroup said.
Positive quarter for the FTSE 100
A rally for mining stocks means the London market will hobble to the finish line even higher than where it started an increasingly busy third quarter of the year.
The turn to commodities followed some respite in falling iron ore prices, ensuring that Anglo American and Rio Tinto shares are up 2%.
The FTSE 100 index rose 38.28 points to 7,146.44, despite lingering concerns about the health of the Chinese economy after the latest Manufacturing Purchasing Managers Index showed factory activity s ‘was contracted for the first time since the onset of Covid-19.
The focus is now on whether the seven-day Golden Week holiday in China, which begins tomorrow and is a key barometer of economic health, is seeing an increase in domestic travel.
The Evergrande crisis in the country is also nearing an end after Reuters reported that some offshore bondholders did not receive the interest payments due Wednesday.
The fate of the indebted real estate company is among the worries that cloud the outlook for global markets in recent days, with rising energy prices and the prospect of an earlier-than-expected interest rate hike increasing volatility.
Concerns accelerated the flight to the US dollar, with the pound now at its lowest level against the greenback since December. It was little changed today at $ 1.34, reflecting a backdrop of stagflation fears and further increases in natural gas prices.
Chris Beauchamp, IG’s chief market analyst, said: âTalking about the pound sterling as if an emerging market currency is back and, as usual, is somewhat off target, because it doesn’t It hasn’t really been a good week for the Euro, Yen, or Aussie, but it shows that a seismic shift towards the US dollar is underway. â
The FTSE 100 index benefited this year from the TINA effect – there is no alternative – as equities remain attractive due to low yields on cash and government bonds. It is up more than 10% for the year and will end the September quarter up 1%.
The struggling stocks today included Rolls-Royce after peaking 18 months earlier this week following a deal with the U.S. Air Force. Shares fell 2% or 3.3p to 141.3p.
The FTSE 250 was 105.15 points higher at 23,256.12, led by online valuation firm Trustpilot as stocks jumped 5% or 17.8p to 375p.
Virgin Money to Cut Branches, Jobs in Digital Disruption
Virgin Money will close 31 branches resulting in the loss of 112 jobs, the latest sign of the withdrawal of Main Street banks.
In a statement titled “Digital Strategy Acceleration Update,” the bank said customers are “increasingly adopting” online banking.
While the move seems logical, it will spark further questions from MPs, fearing that some consumers will find themselves without a branch to go to.
Boohoo’s full-year sales warning drops stocks 11%
Boohoo lowered its full-year sales forecast as global supply chain disruption and Main Street reopening threatens to dampen the fast-paced fashion giant’s turbo growth, knocking its shares down 11% .
Shares of the online retailer fell 28.4 pence to 227.6 pence, despite sales in the six months of August jumping 20% ââto a record Â£ 975.9million .
Investors have sought to focus on higher shipping costs, up Â£ 26million in two years, contributing to a 64% drop in pre-tax profits to Â£ 24.6million and a number of headwinds the AIM-listed retailer faces.
Read the full story here.
Oxford Nanopore debuts
Oxford Nanopore shares got off to a good start in one of London’s biggest IPOs this year.
The gene sequencing company was initially valued at Â£ 3.4 billion after the shares were valued at 425 pence, against a previous indicative price range of between 375 pence and 450 pence.
They then changed hands to 552p, a 30% jump amid strong demand from institutions in conditional trades.
Oxford Nanopore, which was formed out of the University of Oxford in 2005, is raising Â£ 350million through the issuance of new shares.
Biotechnology’s desktop and wearable products enable low-cost, real-time analysis of DNA and RNA by researchers both in the lab and in the field. It has sequenced the genetic code of the Covid-19 virus to track the emergence of variants around the world and is also used in cancer research, viral epidemic surveillance, and crop science.
Managing Director Gordon Sanghera said today his company is still “only at the foot of a long and exciting journey”
âI believe our unique technology will open up many new possibilities for positive impact, both by enabling new discoveries in scientific research, and through more accessible, faster and richer biological knowledge in healthcare environments,â agriculture, food and understanding. â
Diageo shares update on optimistic CEO update ahead of AGM
Shares of Diageo rose 2% early in the session following a pre-AGM update from the beverage giant.
Managing Director Ivan Menezes told investors that the FTSE 100 company, behind brands from Johnnie Walker to Guinness, sees its North American business “performing strongly, despite some supply chain constraints.”
In a statement, Menezes said the company expects organic operating margin to benefit from a further upturn in sales figures, and said the group is managing mounting inflationary pressures – including issues of Supply Chain.
Annual UK house price growth in September slows, but remains up 10%
Prices in September hit Â£ 248,742, with a modest annual slowdown to 10% from the 11% growth seen in August, according to mortgage lender Nationwide.
The company’s chief economist, Robert Gardner, said house prices still remain about 13% higher than before the start of the pandemic.
Read the full story here.