At 9.30am the latest UK GDP figures are announced for the last quarter. The growth rate is expected to come in at +0.3%. It may surprise at +0.4% GDP, though it may not. If GDP comes in lower it will make an argument for a Bank of England interest rate rise – more or less priced in by the markets – harder. In turn, that may damage sterling. The GDP result also affects the Chancellor’s Budget spreadsheet maths.
Despite awful wage growth and dismal productivity plus warnings of lower investment (worries about Brexit), the UK economy has been kept aloft by consumers willing to spend, often with money they don’t have (credit – think the soaring growth of car sales on PCP plans).
But the build-up of shrinking wages and the on-going effects of a far lower pound, making imports more expensive, is a toxic brew. It’s complicated by the fact that so much of the UK economy is built on low-paid service industry employment. There are plenty of straws in the wind: the UK retail sector saw its lowest growth rate in four years for the three months to September. Threadneedle Street, either way, is in a tight spot. If GDP disappoints, that spot gets tighter.
At close to 7am sterling was at $1.3134, up +0.04% while up +0.03% against the euro at $1.1164. WTI crude was down -0.27% at 52.33 while Brent crude was at 58.14, down -0.05%. Gold is down -0.09% at 1,273.8. Watch for the German IFO business sentiment index, out shortly. The main currency mover for the euro is tomorrow when an ECB meeting is scheduled.
- UK FTSE 100 7,526.54 +0.03%
- Dow 23,441.76 +0.72%
- S&P 500 2,569.13 +0.16%
- Nasdaq 6,598.43 +0.18%
- Nikkei 225 21,700.78 -0.47%
- DAX 13,013.19 +0.08%
- CAC 40 5,394.80 +0.15%
- Gold 1,275.20 -0.24%
- Oil WTI 52.34 -0.25%
Lloyds Q3 profits climbs
The major corporate news this morning is Lloyds: third quarter underlying profits are up almost +10% to £2bn while pre-tax profits are up +8% to £6.6bn. Lloyds – it is a big deal with a 25% cut of all UK current accounts plus more than 20% of the UK mortgage market – claims improved financial targets for 2017 and is on track to deliver its longer term guidance.
There’s also an improved net interest margin at +2.85% (this number, note, is a good marker of profitability). “These results,” says CEO António Horta-Osório, “highlight the strength of our customer focused, simple and low risk business model and the benefits of our competitive advantage in the UK. Asset quality remains strong, reflecting our prudent approach to risk."
Lloyds saw the last chunk of public-owned shares sold in May. Lloyds shares at 67.27p are up +7.8% year-to-date and +22% up on the year.
Metro Bank claims customer and profits rise
Staying with banks tiddler Metro Bank claims a decent third quarter with a +77% rise in underlying profit while the number of customer accounts rise to 1,124,000, up +33% year-on-year. Deposits from customers are now valued at £955m, up +10% quarter-on-quarter.
"We continued to support the SME sector,” said the bank, “the backbone of British business, and are on track to meet our January pledge to lend £1bn of net lending to businesses during 2017.” Asset quality remains strong, it claims with, non-performing loans taking 0.33% of the total portfolio.
Breaking news: High-street retailer Jigsaw has launched a new advertisising campaign built around the pluses of immigration. "We are all about fabric from Italy," Jigsaw boss Peter Ruis told the BBC earlier, "we’re all about people from Germany, people from Japan. We’re all about our customers who come from everywhere and very few of us – we’ve proven this – are 100% British."