Lower diesel and petrol prices helped give UK inflation a kicking in June, tumbling from 2.9% to 2.6%. The surprise price news means the risk of a Bank of England interest rate rise is pushed back – for now. UK factory gate prices also came under pressure, slipping from 3.6% to 3.3%.
The Office for National Statistics inflation figure immediately stung sterling, down 0.2% against the dollar. At 4pm the pound was trading at $1.3027 while the euro was up more than 0.80% to $1.574 against the greenback, a 52-week high, helped by fresh political set-backs for Donald Trump and more negative dollar sentiment generally.
However the higher euro was not good news for European stocks with both the French CAC and the German DAX dropping, -1.15% and -1.44% respectively.
The FTSE 100 closed down 12 points at 7,392.01 tonight with Experian and Barclays the two main losers, down -2.05% and -1.91%. However G4S shares surged almost 3.5% plus there were robust gains for Royal Mail, up 3% and Primark owner ABF, up 2.2%.
- UK FTSE 100 7,392.01 -0.19%
- Dow 21,510.96 -0.55%
- S&P 500 2,454.40 -0.19%
- Nasdaq 6,316.11 +0.03%
- Nikkei 225 19,999.91 -0.59%
- DAX 12,401.95 -1.47%
- CAC 40 5,170.47 -1.14%
- Gold 1,242.40 +0.71%
- Oil WTI 46.43 +0.93%
Rates held down for now
The British inflation news means UK prices have been curbed for the first time in nine months. The curb is needed given that flailing inflation-adjusted UK wages continue to make life tough for many, impacting consumer spending.
“Today’s downside inflation surprise together with overall recent soft activity data,” said Barclays earlier, “provides ample support for our view that the Bank of England will maintain the status quo over our forecast horizon.”
The weakened data will likely challenge the most hawkish members of the Bank of England monetary policy committee wanting an immediate hike added Barclays. “We expect some moderation in the MPC’s rhetoric regarding the upside risks to rates.”
Netflix's summer turn-on
Elsewhere Netflix shares have surged almost 11% on the back of better second quarter numbers, taking the overall subscriber count to more than 104m. The subscriber rise is impressive given that the second quarter is traditionally a slower one sales-wise. There was marked growth from Netflix’s international subscribers.
Though competition is intense, Netflix says YouTube is earning more than a billion hours a day of consumers’ time with one type of entertainment, “while we are earning over a billion hours a week with our type of entertainment.”
“We’ve grown from zero to over 50m streaming households in the US over the last 10 years, and yet HBO continues to increase its US subscriptions. It seems our growth just expands the market.”
Breaking news: The IMF has raised Spain's growth estimate for 2017 claiming tourism is strong and the retail economy is recovering. Zoopla claims the average UK home has risen in value by £3,000 since the start of the year though average property prices in the North East are slightly down.