LONDON MARKETS: FTSE 100 Holds Steady As Traders Focus On Retail Sales Data
19 July 2018 - 6:35PM
Dow Jones News
By Sara Sjolin, MarketWatch
Pound slips to $1.3025
U.K. stocks struggled for direction in early trade on Thursday,
as traders stayed on the sidelines ahead of a report on retail
sales that could influence the case for a Bank of England interest
rate rise in August.
What are markets doing?
The FTSE 100 index slipped 0.1% to 7,668.43, after closing at
its highest level since July 10 on Wednesday
(http://www.marketwatch.com/story/easyjet-bhp-billiton-propel-ftse-100-higher-ahead-of-inflation-data-2018-07-18).
That gain came as the pound tumbled, after a disappointing reading
on inflation raised doubt that the BOE will lift interest rates
next month.
On Thursday, sterling continued to trade lower at $1.3025,
compared with $1.3071 late Wednesday in New York.
What is driving the market?
Focus is on the retail sales report for June and what it could
mean for the path of interest rates. Economists expect sales to
have gone up 0.3% month-on-month, pulling back from growth of 1.3%
in May.
"Those forecasts tend to be way off base, however, so it'll be
interesting to see whether or not the World Cup and the sunny
weather helped things out a bit," said Connor Campbell, financial
analyst at Spreadex, in a note.
The England soccer team surprised most fans by reaching the
semifinal in the World Cup, which may have boosted spending on
going out and on merchandise as people watched games.
The figures will be closely watched, especially after June
inflation numbers out Wednesday missed forecasts, coming in at 2.4%
versus the 2.6% expected. The disappointing reading raised
questions as to whether the BOE will hike rates at its Aug. 2
meeting, as has been widely expected. However, the market is still
pricing in a rate rise.
The retail report is due out at 9:30 a.m. London time, or 4:30
a.m. Eastern Time.
What are analysts saying?
"With the market pricing in around a 72% chance of the BOE
hiking rates, a surprise to the downside in retail sales could see
that percentage fall further," said Jasper Lawler, head of research
at London Capital Group.
"In this scenario, the pound could head back towards support at
$1.30. A weaker pound would be expected to boost the FTSE as we saw
in the previous session," Lawler said in a note.
Which stocks are in focus?
Shares of WPP PLC (WPP.LN) slid 3.4% after the advertising
giant's competitor Publicis Groupe SA (PUB.FR) missed revenue
forecasts for the second quarter
(http://www.marketwatch.com/story/publicis-revenue-lags-views-on-health-care-miss-2018-07-19).
Publicis shares were down 9.1% in Paris.
SSE PLC (SSE.LN) fell 3.3% after the utility company reported
core earnings below expectations
(http://www.marketwatch.com/story/sse-profit-hit-by-warm-weather-2018-07-19),
saying warm weather had weighed on gas demand.
Unilever PLC (ULVR.LN) (ULVR.LN) slipped 0.4% after profit at
the consumer goods giant declined in the first half of 2018
(http://www.marketwatch.com/story/unilever-profit-sags-as-strike-hits-sales-growth-2018-07-19).
Anglo American PLC (AAL.LN) gave up 1.9% after a production
update
(http://www.marketwatch.com/story/anglo-american-total-production-grows-6-2018-07-19).
(END) Dow Jones Newswires
July 19, 2018 04:20 ET (08:20 GMT)
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