A rash of bad business sentiment hit the pound today: Moody’s credit rating agency warned that delayed Brexit talks will hurt the UK economy. Earlier, Visa warned that consumer spending had slowed with bricks-and-mortar stores reporting a -5.3% sales slump in May.
Mid-afternoon saw the pound at $1.2661 against the dollar, down -0.50%, while more than 0.75% down against the euro at €1.1297 later on. Sterling fell even worse against the yen, down more than 1% at 139.14.
Where is ‘strong and stable’ in all this, you might ask? A lack of a firm date for the Queen’s Speech simply adds to the anxiety.
Across the water the US tech stock stress continued with both Amazon and Facebook dipping more than 2% while Apple shares cracked nearly 3%, down to $144.70. Earlier today analysts at Mizuho Securities downgraded Apple from Buy to Neutral on part-concern that strong iPhone 8 sales are already absorbed into Apple's share price.
- UK FTSE 100 7,511.87 -0.21%
- Dow Jones 21,224.18 -0.23%
- S&P 500 2,423.58 -0.34%
- Nasdaq 6,141.54 -1.08%
- DAX 12,698.12 -0.88%
- CAC 40 5,241.69 -1.09%
- Nikkei 225 19,908.58 -0.52%
- Gold 1,267.50 -0.31%
- Oil WTI 46.58 +1.68%
Better news for oil, up more than 1% to $46.33 at 4pm this afternoon; positive noises are emerging from Russia and Saudi Arabia on the effectiveness of the new OPEC production cut.
Porsche diesel sinning?
Another member of the VW family – Porsche – is in the emissions frame. The German Transport Ministry has asked the KBA watchdog agency to look at a range of emissions results from the car manufacturer. According to Reuters last week it’s thought the Porsche Cayenne V6 TDI SUV had higher NOx emissions than was legally acceptable, with rumours of a defeat device used.
Already the VW dieselgate scandal has cost the German manufacturer many billions; almost $15bn has been put aside to deal with US repercussions, including compensation awards, alone. Recently the German KBA demanded that Audi recall more than 20,000 A7 and A8 models on emissions worries.
The scandal is pulling VW’s top man increasingly into focus: Group CEO Matthias Müller was the boss of Porsche from 2010 to 2015. Up to now no emissions defeat device on Porsche vehicles has been detected.
The UK is ‘skint’
Financial commentator Justin Urquhart-Stewart earlier today declared UK consumers “skint” following Visa’s research that consumer spending is starting to fall away. Several UK businesses commented that weaker wages growth was forcing many to hold back, with nervousness about the strength of sterling adding to the spending reticence.
“More of our customers,” said Josh Beer from the Illustrious Pub Company, “gravitated towards deals and offers in the past month; it feels as though they were biding their time, and cutting back until they became more confident in the economy. We also face other challenges - price rises and minimum wage increases in particular are forcing us to explore ways to make our business more cost-efficient.”
Visa’s research measured consumer spending on a range of Visa cards – credit, debt and pre-paid – and found spending was 0.8% lower in May compared to May 2016. Other data corroborates Visa’s economy weakness worry: last week the National Institute of Economic and Social Research claimed UK growth up to May had not moved since the start of the year.
As far as stocks goes, the FTSE 100 finished 15 points lower at 7,511.87, down -0.21%, with Johnson Matthey and Shell the main winners of the day, up 2.04% and 1.56%; Fresnillo and Micro Focus Int fell 4.9% and 3.8% respectively.
However there was a bigger dip for the FTSE 250 overall, falling more than 0.40% to 19,682.70, down almost 88 points. Acacia Mining slumped 13% and Ocado shares also took a beating, down more than 7.5%.
Breaking news: GE shares leap 4% on news that CEO Jeff Immelt is to leave.