Sterling breaks through to $1.30 meanwhile UK spending surges in April

Supported by strong UK retail sales the pound lifted above $1.30 today, its best result since September last year. UK retail sales climbed 2.3% in April compared to March, confirmed the Office for National Statistics.

The dollar continued to trade lower accruing close to six-month lows against the euro (1.1122) though better-than-expected US unemployment numbers arrived earlier in the day. US Treasury yields were pushed lower.

The FTSE 100 saw a 67-point sell-off to 7,436.42. In Europe both the CAC and DAX also took more losses (4pm), down -0.50% and -0.30%.

• UK FTSE 100 7,436.42 -0.89%
• Dow 20,664.85 +0.29%
• S&P 500 2,366.86 +0.42%
• Nasdaq 6,054.42 +0.72%
• DAX 30 12,593.02 -0.30%
• CAC 40 5,289.44 -0.53%
• Gold 1,253.80 -0.39%
• Oil WTI 49.41 +0.67%

Photo of several pound coins; Shutterstock

US stocks lifted modestly with the S&P 500 up 0.32% to 2,364.36 and the Nasdaq, recovering heavy losses from Wednesday, up +0.72% to 6,050.28.

Double trouble on pensions

Earlier today the Conservative government was warned a commitment to a double-lock promise on pensions – downgraded from a triple-lock – remained unaffordable, according to the Institute of Fiscal Studies (IFS).

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“State pension spending in fifty years time is only 0.2% of national income lower (less than £5 billion in today’s terms),” said the IFS.

“In other words, moving to a double lock undoes only around a quarter of the damage done by the triple lock to the long-run sustainability of the public finances.”

Earlier in the day the Tories introduced election manifesto plans for a rash of sovereign wealth funds to bolster infrastructure investment.

Berendsen soars

As far as stocks go, there was vivid movement for FTSE-250 listed UK laundry player Berendsen. Its shares soared more than 21% to 1,048p after a £2bn bid from Elis, its French rival.

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The biggest FTSE 100 winner was fashion operator Burberry, up 5.4% to 1,729p despite a substantial 20% profits plunge and a warning that the benefits of a weaker pound were contracting.

Goodbye to Bailey

Burberry annual revenues climbed 10% to £2.8bn, thanks in part to currency tailwinds. The new numbers marked the exit of Burberry chief exec Christopher Bailey for new CEO Marco Gobbetti.

However there’s some concern for Asda with sales slipping 2.8% on the all-important like-for-like basis for the first quarter (Jan-March). These numbers were the Walmart-backed retailer’s eleventh consecutive quarter of poor sales.

Despite today's stronger UK retail numbers, high street sales generally were poor during the first quarter, not helped by a late Easter. Inflationary pressures remain very much to the fore as wage growth remains stuck for many.