FTSE rises, weak retail sales could hamper sterling’s rise

Weak UK retail sales could hamper sterling’s rise

Data showing an unexpected 0.9% drop in UK retail sales in August, compared to a consensus forecast in a WSJ poll for an increase of 0.8%, “could take some of the downside. momentum of rising UK money market rates and also sterling, “says ING. The impact may be limited, however, as it is unlikely that the weak figures will prompt the Bank of England to “issue a” rate protest “” against the market prices of future interest rate hikes upon the market. meeting next week, according to ING. This should leave GBP / USD hovering around 1.3800 and EUR / GBP near 0.8500, he says. GBP / USD is up 0.1% to 1.3801, after trading at around 1.3806 before the data. EUR / GBP appreciates 0.1% to 0.8535, from around 0.8525 previously.

 
Companies News: 

Safestay says board has been approached over possible offer

Safestay PLC said on Friday that the board had received a “very early and very conditional approach” from a third party regarding a possible offer for the company.

Volvere 1H Pretax Shrunken Loss

Volvere PLC on Friday announced a significantly reduced pre-tax loss for the first half of 2021, noting that its financial position remains strong, with high liquidity.

Accsys Technologies Five-month performance marked by sales and revenue growth

Accsys Technologies PLC said on Friday that its performance in the first five months of fiscal 2022 was strong, marked by sales and revenue growth.

1H pre-tax loss of proton engine power systems significantly reduced

Proton Motor Power Systems PLC on Thursday announced a significantly reduced pre-tax loss for the first half of the year, noting that it generated a positive gross margin.

Steppe Cement 1H Profit Before Tax, Income Rose

Steppe Cement Ltd. said on Friday that pre-tax profit increased in the first half of the year as revenues increased.

GoldStone Resources shares tumble following continued shutdown of gold production at Ghanian mine

The shares of GoldStone Resources Ltd. fell on Friday after the company said it had been unable to start gold production at the Homase mine in Ghana.

NextEnergy Solar Fund signs £ 100million joint venture with Eelpower

NextEnergy Solar Fund Ltd. on Friday announced it has entered into a £ 100million ($ 137.9million) joint venture partnership with Eelpower Ltd., a UK battery storage specialist

The loss of Midatech Pharma 1H has fallen sharply

Midatech Pharma PLC said on Friday that its loss in the first half was significantly reduced from the previous year.

Direct business shows reduced pre-tax loss over 1 hour thanks to lower one-off costs

Live Company Group PLC reported a reduced pre-tax loss for the first half of 2021 on Friday, but said revenue fell due to the Covid-19 restrictions.

Ashtead Group notes some shareholder opposition to compensation policies

Ashtead Group PLC said on Friday that directors’ compensation resolutions received relatively weak support at its annual general meeting.

 
Market Talk: 

HSBC and StanChart set to benefit from better outlook in Asia

0936 GMT – Asia-focused banks appear poised to benefit from a better outlook in the region, Barclays said, raising its recommendations on HSBC to overweight to underweight and Standard Chartered to equalize to underweight. Barclays says even though it prefers HSBC, both banks should benefit from an improving outlook as income dynamics accelerate. “We support short-term growth concerns and developments in Chinese policy are driving valuations low, limiting downside risk and underestimating significant upside potential. With both stocks trading at rare discounts, we see attractive entry points, ”Barclays analysts say, raising their prices. Target on HSBC at 530 pence and on StanChart at 550p. Stocks gained 1.6% at 375p and 0.2% at 442p respectively.

BOE communication is seen as essential as two new policymakers join them

0933 GMT – Bank of England officials face a ‘delicate time for the UK economy’ and communication will be key to seeing which factors they prioritize in their policy decisions, said Luke Bartholomew, senior economist at Aberdeen Standard Investments. As inflationary pressures increase as growth slows, the Bank could face a trade-off on which factors it favors, he said. While the new members of the Bank’s decision-making body, Catherine Mann and Huw Pill, are unlikely to vote against the majority of the committee at their first meeting, “investors should carefully follow the Bank’s communication during months and prepare for volatility if we actually start the rate hike cycle next year, ”he said.

BOE may need to report if market rate speculation has gone too far

0931 GMT – Money markets and UK sovereign debt all predict a higher probability of interest rate hikes next year, and the Bank of England may need to signal to markets next week if current speculation is gone too far, says Luke Bartholomew, senior economist, Aberdeen Standard Investments. “Speculation is mounting that the bank will start raising interest rates next year,” he said. However, he believes that the current episode of rising inflation will prove to be transitory and that unemployment could increase towards the end of the leave scheme. “The Bank will need to promptly signal to the markets if it thinks the current bullish speculation has gone too far, otherwise it risks these predictions having some self-fulfilling logic,” he said.

Lower UK retail sales point to shift to spending on services

0903 GMT – UK retail sales drop in August reflects households spending more in non-business categories as life returns to more normal after Covid-19 lockdowns trigger spending plummet in services, said Capital Economics UK chief economist Paul Dales. However, the decline in retail sales is still a cause for concern as high frequency data also does not indicate an increase in non-retail spending, suggesting that part of the weakness may be due to the causes consumers to become more cautious as Covid-19 cases increase, he says. “The data suggests that the economy did not regain much momentum in August after growing just 0.1% from July, but an increase in non-trade spending is likely to keep GDP from falling,” Dales said.

Boe rate hike markets overpriced outlook, according to Deutsche Bank

08:18 GMT – Interest rate markets are overstating the prospects for the Bank of England’s interest rate hike next year, according to Deutsche Bank. “Rate pricing is consistent with a base rate of 50 basis points by the end of 2022 and a very flat curve thereafter involving 75 basis points as the long-term terminal rate,” said Sanjay Raja and Panos Giannopoulos from DB. The February 2022 overnight index swap, currently at 15.9 basis points, implies about a 70% chance of a 15 basis point increase, they note. “While of course a month of February [rate] increase could materialize, it is far from being won in advance.

Lower UK retail sales reflect supply constraints, with demand shifting to services

0801 GMT – The drop in UK retail sales in August reflects the shift in demand towards services, said Elizabeth Martins, senior economist at HSBC. UK retail sales fell 0.9% month-on-month in August, the third decline in four months. “Retail sales volumes in the UK are still higher than before the pandemic, but after getting off to a rapid start to the reopening period they have lost some momentum,” Martins said. Rotation to service is evident on the food sales side, she says. Sales at food stores fell 1.2% in August, while data from Open Table showed restaurant reservations increased and, according to the Office of National Statistics, social spending too. The decline in retail sales also reflects supply constraints, as consumers cannot buy what is not on the shelves, Martin says.

BOE should keep its policy on hold

0756 GMT – The Bank of England is expected to keep monetary policy on hold at next week’s meeting. “It is still too early to expect a new hawkish pivot from the monetary policy committee at this point,” Deutsche Bank said. Growth has slowed considerably and although hires, unemployment and vacancies were positive, “the scale of staff on leave remains worrisome, only weeks away from the leave program,” said Sanjay Raja and Panos Giannopoulos of DB. Likely uncertainty around the slowing labor market, combined with slowing demand and uncertain health prospects, could weigh on the final monetary policy report later this year, they say.

 

Contact: London NewsPlus, Dow Jones Newswires; Write to Sarka Halas at [email protected]

(END) Dow Jones Newswires

September 17, 2021 05:59 ET (09:59 GMT)

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