Though UK interest rates were kept at 0.25% today by the Bank of England the margin of argument between policy makers has climbed: three members of the Monetary Policy Committee (MPC) voted for a rise. Previously, just one – Kristin Forbes – voted for a rate hike.
News of a divided MPC pushed the pound up against the dollar for a while, though sterling dipped back later. At 4pm sterling was at $1.2762, up 0.05% on the day while the euro was down more than 0.60% at $1.1143, a weekly low.
Earlier the US dollar did get some support from better manufacturing data. “The headline general business conditions index shot up twenty-one points to 19.8, its highest level in more than two years,” stated the June Empire State Manufacturing Survey. But that didn't prevent a raft (see further below) of heavyweight US stocks falling in value.
Elsewhere, the German Dax was under pressure, down more than 1.20%, in part-response to yesterday’s US rate hike decision.
- UK FTSE 100 7,419.36 -0.76%
- Dow 21,281.91 -0.70%
- S&P 500 2,420.99 -0.70%
- Nasdaq 6,115.77 -1.28%
- Nikkei 225 19,831.82 -0.26%
- DAX 12,655.86 -1.18%
- CAC 40 5,193.02 -0.96%
- Gold 1,257.20 -1.47%
- Oil WTI 44.54 -0.45%
Non-food UK sales down
In the UK, more evidence that consumers are feeling the pinch: the latest Office for National Statistics figures show that the value of non-food goods fell 1.2% between May and April.
Additionally, store prices climbed 2.8% over the last 12 months says the ONS – the biggest price surge since early 2012. The price stress is becoming more acute as the difference between wages and inflation increases (yesterday new data showed average earnings slumping 0.6% in April alone).
“The year-on-year growth in the quantity bought for retail sales in May 2017 was at 0.9%,” said ONS statistician Ole Black. “We have not seen lower growth on the year since April 2013. Increased retail prices across all sectors seem to be a significant factor in slowing growth.”
£80m bill for BA travel chaos
Next, news that the British Airways IT meltdown which grounded tens of thousands of passengers over the Bank Holiday weekend will cost shareholders £80m. BA claim the breakdown was caused by an engineer disconnecting a power supply.
The chaos wasn’t just limited to British Airways but also to Iberia, Spanish sister airline to BA whose parent company IAG owns both brands. More than 700 flights were cancelled in total.
Its subsequently emerged that outsourcer Capita could be brought into run BA’s call centres in the north of England though there is no confirmation of a contract yet. Earlier today, many UK airline passengers were hit by a baggage systems failure from Heathrow Terminals 3 & 5.
Lastly, both US and UK shares headed south today. Earlier the S&P 500 tech sector tumbled more than 1% with sizeable share slumps from Apple (-1.23%) and Facebook (-1.32%).
The FTSE 100 also slipped lower, down 55 points to 7,419.36 with big falls from Fresnillo, down 6.14% and Next, down -6.14%, badly hit by a Credit Suisse downgrade to Underperform. Anglo American and Randgold Resources also fell heavily while M&S shares were down more than 4.71% at 370p.