Weekly Blog 18/01/2019

Mike BaxterWeekly Blog0 Comments

The delayed vote on Theresa May’s exit deal took place on Tuesday, where it was defeated by a historic 230 votes. This then triggered a vote of no confidence by Jeremy Corbyn, which May narrowly survived by 19 votes. It looks as if a no-deal Brexit is increasingly unlikely, however, there remains little consensus as to the next course of action (shock…!). May has pushed back the next Brexit vote to January 29 and in the interim will embark on cross-party talks in an effort to break the impasse.

UK inflation dropped to almost a two-year low, largely as a result of depressed oil prices. This has reduced expectations for the Bank of England to increase interest rates in 2019. This has been interpreted as good news for UK households, with wages growing, in cash terms, at the highest rate since the financial crisis. Any future rate changes will be tied to the Brexit negotiations.

The US remains on its longest-ever government shutdown, and concerns are growing on the effect of a continued deadlock on the economy. Jamie Dimon, JPMorgan Chief Executive, said that if the shutdown were to continue quarterly growth could be driven down to zero. In addition, the Federal Reserve sees US business optimism dimming following recent market volatility, higher interest rates and trade tensions.

Markets in a minute

  • The FTSE 100 is up 0.46% this week.
  • The 10 year Gilt yield has risen to 1.34%.
  • Sage shares were cooking on Thursday (+5%) following a decent trading update.
  • Just Eat shares delivered, rising 4.5% following a rating upgrade from Morgan Stanley.
  • Bovis (+6%) reacted positively to inline numbers, which extended to other UK housebuilders.
  • Reckitt Benckiser’s CEO Rakesh Kapoor announced his decision to retire at the end of 2019. Shares fell 4% on the news.
  • Boohoo indeed, as shares fell 5% on Tuesday, despite a decent set of results.
  • Investors have watched Netflix closely this week. The shares were up over 5% on Wednesday following news it was raising prices for US customers by as much as 18%. However, in after hours trading yesterday, the shares fell 3% after mixed results.

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