Weekly Blog 14/02/2018

Mike BaxterWeekly Blog0 Comments

It has been a tumultuous week for Theresa May. Firstly, at the eleventh hour she decided to postpone the House of Commons vote on her proposed Brexit deal, as support appeared wafer thin. Next, a trip to Europe to plead for a better deal dramatically cut short by Eurosceptic MPs securing enough signatures to enact a confidence vote… (who in their right minds would desire the leadership position at this moment….!). Prime Minister May secured enough backing from her Party to remain in charge, however, it was unconvincing with 1/3 saying that they had no confidence in her leadership. Now May returns to Europe to try and convince E.U leaders to provide legal assurances on the Northern Ireland backstop. Early reports are not looking good and reflecting on this sterling is lower against the $ and € over the week.

The Retail sector has had an equally challenging week. Superdry issued a profit warning, Inditex (parent company of Zara) sold off strongly following what appeared to be reasonable results and Mike Ashley entered the conversation stating that ‘November was the worst November for retailers in living memory’ and had his offer of a £40m loan to Debenhams turned down, which led to Sports Direct aggressively selling off. Fellow retailers Next, Marks & Spencer’s and Debenhams were caught in the crossfire.

US stocks moved higher on optimism about US-China trade relations, with China agreeing to reduce tariffs on imported US cars from 40 to 15% and Chinese companies resumed purchases of American soya beans for the first time. It is perhaps unsurprising that Trump appears to be using the arrest of Meng Wanzhou as a bargaining chip. US inflation cooled, with lower energy costs mitigating pricing pressures. This may result in the Fed reducing the predicted pace of interest rate increases.

 Markets in a minute

  • The FTSE 100 is up 0.77% this week.
  • The 10 year Gilt yield has fallen to 1.29%.
  • Purplebricks was down 12% on Thursday, citing Brexit uncertainty as the architect of their recent downfall.
  • On Wednesday, Rolls-Royce released a positive trading statement, with shares receiving a welcome boost.
  • Apple has announced plans to open a $1bn campus in Austin, Texas despite concerns of its core iPhone sales.
  • An FT note stating that Amazon may be looking at Morrison’s sent the UK supermarkets share price to a higher shelf.
  • Balfour Beatty is up c.4.5% this morning after constructive results, despite industry headwinds.
  • Wood Group rose 6% as it gave an upbeat outlook for the remainder of the year.

Story of the week

Stephen Curry, point guard for NBA champions Golden State Warriors and considered one of the best shooters in NBA history following his meteoric rise, said that he did not believe that the US had ever landed on the moon on a podcast on Monday, and that it had been faked with reference to film director Stanley Kubrick… The basketball star’s opinion is far from alien with a number of conspiracy theories. NASA responded by inviting Curry to tour the lunar lab at the Johnson Space Centre in Houston. It looks like the casting team for the sequel of Space Jam may have missed a trick…

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