The main news today was UK inflation, soaring from 2.7% in April to 2.9% in May – the highest figure since midsummer 2013. The price pressure was most acute from overseas package holidays and imported computer games while UK food and clothing costs were also up modestly.
The slump in the value of the pound since the Brexit referendum was clearly to blame. The pound recovered 0.50% earlier in the day hitting $1.2728 though that’s still -1.40% down on the week. The euro was up 0.12% to $1.1213. However currency pairs face multiple headwinds tomorrow with a US Fed meeting likely to produce a rate rise, plus new wage growth data from the UK, not likely to look good.
There was some respite for US tech shares earlier following the recent profound sell-off; Facebook and Microsoft shares saw gains of 1.35% and 1.20% earlier in the day. In the UK the FTSE 100 ended bang on at 7,500.44 with the biggest fallers being 3i Group down 2.91% and Merlin Entertainments, down 2.72%.
- UK FTSE 100 7,500.44 -0.15%
- Dow Jones 21,295.26 +0.28%
- S&P 500 2,436.63 +0.30%
- Nasdaq 6,214.55 +0.62%
- DAX 12,765.57 +0.59%
- CAC 40 5,264.64 +0.46%
- Nikkei 225 19,898.75 -0.05%
- Gold 1,264.70 -0.33%
- Oil WTI 45.74 -0.74%
More anxiety for North American retail prospects – at least if they’re brick and mortar. Sears is slashing 400 jobs in an effort to compete with online players like Amazon, though many would say it’s a losing battle given Amazon’s increasing clout and reach.
“While the total number of people who are directly affected represents a small fraction of our total headcount,” said Sears, “we are conscious of the impact on individual employees. We are providing eligible associates severance compensation and transition assistance.”
Sears is still making good on a $1.25bn restructuring program and claims to have made $1bn in savings already. However the Canadian retailer has been making steady losses since 2014. Sears’ $6.82 share price is down 26.6% year-to-date though this accelerates to 43% over 12 months.
Better news for Spain. Spain’s central bank says growth for 2017 should come in at 3.1% rather than 2.8% as previously thought. Even last year, Spain’s economy grew 3.2%.
The Bank of Spain has not changed its 2.2% growth target for 2019. However Spain’s economy is heavily reliant on tourism, thought to be close to 11.1% of overall GDP. The plunging pound will deter many UK visitors to the Spanish mainland, at least for much of 2017.
Whip the UK out of the picture and tourism momentum is still resilient: Spain had 75m visitors last year and new estimates from Caixabank Research predicts this figure will rise to 84m this year. Spain has increasingly scooped up visitors nervous of terrorism risk, deterred from traditional Middle East destinations like Egypt and Turkey.
Breaking news: The Unite union is threatening new strikes at UK BMW-owned plants over concerns about pensions. Merlin Entertainments says the recent rash of terror attacks is deterring demand at certain UK attractions including Madame Tussauds and the London Eye.