There’s some churn in the markets following last week’s epic UK election result. Asian shares slipped today with significant concern on tech shares – Apple and Microsoft shares are down -3.8% and -2.2% respectively. Further ahead, it’s widely expected that the US Fed will hike rates on Wednesday.
The Bank of England has a monetary policy meeting later this week but it’s not expected to raise rates. The pound though appears stable, all things considered, at $1.2768, down -1.06% on the week while the euro is at $1.1214.
However the pound is definitely in bear territory and some analysts point more drift towards the 1.2700 handle (though a softer Brexit must mean a measure of support for the pound also).
In France early numbers suggest a landslide victory for Emmanuel Macron who appears set to take more than 440 seats in the 577-seat National Assembly.
“With a likely clear majority in the lower house,” says Barclays analyst Francois Cabau, “president Macron will be able to lay out a stable and expected policy framework that could boost further companies' and households' confidence, which are already at their highest levels since 2011 and 2007 respectively.”
- UK FTSE 100 7,527.33 +1.04%
- Dow Jones 21,271.97 +0.42%
- S&P 500 2,431.77 -0.08%
- Nasdaq 6,207.92 -1.80%
- DAX 12,815.72 +0.80%
- CAC 40 5,299.71 +0.67%
- Nikkei 225 19,904.71 -0.54%
- Gold 1,269.00 -0.19%
- Oil WTI 46.03 +0.46%
UK business uncertainty appears profound following the general election and its tumultuous impact on the Conservative Party. A poll by the Institute of Directors sees a “dramatic drop” in confidence. Almost two thirds of IoD members said they thought uncertainty over the government was "a significant concern" for the UK economy.
However a possible fresh election was very unpopular with IoD members. “The last thing business leaders need is a Parliament in paralysis,” says IoD director general Stephen Martin, “and the consequences for British businesses and for the UK as an investment destination would be severe."
On home turf new data about the services sector is a concern. Visa says UK consumer spending dipped 0.8% year-on-year in May, the first dip since 2013 – a pressure blamed increasingly on weak wage growth and rising prices.
Weir buys KOP
Earlier this morning Weir Group says it is to buy KOP Surface Products, a surface pressure control technologies, systems and services operator for the oil and gas industry for US$114m in cash from Akastor ASA, a Norwegian-listed investor in oilfield services.
KOP is head-quartered in Singapore and employs 450. In the three years to December 2016, KOP generated an average of US$117m in annual revenues and US$21m in annual EBITDA claims Weir.
Weir shares have soared almost 50% to 1,900p in the last 12 months though on a year-to-date basis the FTSE 250 company has barely moved, up +0.58%. KOP's history stretches back to 1934 and has market positions in Asia, with an emerging business in the Middle East.
Single market access?
Meanwhile ex shadow business secretary Chuka Umunna says single market access is still very much possible, citing non EU players such as Norway and Turkey as possible models to adopt. However the canker is still very much the free movement issue.
"We could actually ask people who have been here for three months,” he said earlier on the BBC Today program, “who have no prospect of finding a job to leave but we choose not to do so."
Labour, under Jeremy Corbyn, has put the emphasis on a “jobs first” Brexit approach. This sees an exit from the European single market, an end to the free movement of people but hanging onto EU legal workplace protections. Either way, the fighting has just begun.
Breaking news: Profits at Mitie have slumped to a £42.9m loss. Toshiba shares have leapt more than 8% on news that Western Digital is raising its bid for Toshiba's semiconductor arm.