Market expectations once again were dealt a body blow this morning on the UK's shock election result. Sterling fell more than 2% at one point though stocks – particularly the FTSE 100 which finished more than 1% higher at 7,527.33 this evening– easily weathered the election news.
Before 4pm this afternoon the GBP/USD pair was trading at $1.2730, down -1.70% while EUR/USD was down just -0.25% at 1.1182. Given the chronic uncertainty and some advance pricing in, the pound has shown remarkable intraday stability.
Ironically, a softer Brexit deal might be better for the pound longer term. The dollar has proved largely steady despite the on-going political drama – FBI director Comey – Stateside.
- UK FTSE 100 7,527.33 +1.04%
- Dow Jones 21,283.52 +0.48%
- S&P 500 2,444.71 +0.45%
- Nasdaq 6,339.34 +0.28%
- DAX 12,800.38 +0.68%
- CAC 40 5,300.01 +0.68%
- Nikkei 225 20,013.26 +0.52%
- Gold 1,269.80 -0.76%
- Oil WTI 45.61 -0.07%
Industrial output pushes up
Despite the UK electoral introspection almost all markets were up today, with the Nikkei 225 climbing beyond the 20,000 threshold, up +0.52%. The German Dax was up +0.73% while the French CAC 40 was up +0.58%. Safe haven gold was down to 1,269.60, down -0.77%.
The biggest FTSE 100 climber was Smurfit Kappa, up almost 5% while Fresnillo and Antofagasta shares were up 3.6% and 3.45%.
UK industrial output accelerated rather less than anticipated in April according to new data from the Office of National Statistics. Still a rebound, but not a huge bounce-back.
Industrial production climbed just 0.2% month-on-month, a great deal short of a 0.7% consensus forecast. However on a year-on-year basis, industrial production slipped 0.8%.
However there was better news on the trade deficit, slipping from £3.9bn in March to £2.1bn, a significant narrowing. However as Nomura said earlier “we would caution that these data are highly volatile and forecasting any one month’s number can be difficult”.
L'Oreal off-loads Body Shop
Elsewhere The Body Shop is to be snapped up by Brazilian cosmetics player Natura for €1bn or £877m from French owner L’Oreal. Originally Body Shop founder Anita Roddick sold Body Shop to L’Oreal for more than £650m amid furious cries of ‘selling out’ to the massively successful Paris-based cosmetics company.
One of the original drivers for the L’Oreal purchase was Body Shop’s eco and supply chain know-how. But Body Shop operating profits slipped to just €34m in the last year, down almost 40%, despite net sales of €921m.
“The closing of the transaction will be subject to the applicable regulatory approvals, notably in Brazil and the United States of America,” said Natura which confirmed is has full approval for the financing of the funds needed to complete the sale.
Breaking news: a UK Cabinet reshuffle is expected over the weekend, possibly Saturday. European Council President Donald Tusk has written to Theresa May reminding her that Brexit negotiations remain "urgent".