FTSE 100 muted as UK economic system flatlined in February – thqaftqlm

FTSE 100 muted as UK economic system flatlined in February

FTSE WASHINGTON, DC - OCTOBER 14: (L-R) Chair of the U.S. Federal Reserve Jerome Powell talks with Governor of the Bank of England Andrew Bailey during a meeting of the IMFC (International Monetary and Financial Committee) at the IMF and World Bank Annual Meetings at IMF headquarters, October 14, 2022 in Washington, DC. Secretary Yellen will hold a news conference and take questions later in the day. (Photo by Drew Angerer/Getty Images)

FTSE: Fed chair Jerome Powell and Financial institution of England governor Andrew Bailey aren’t giving indicators of easing on rates of interest coverage. Picture: Drew Angerer/Getty Pictures

The FTSE 100 and European shares opened blended this Thursday as new information confirmed that the UK’s economic system grinded to a halt in February and central banks point out no let up on rates of interest coverage.

The FTSE 100 (^FTSE) misplaced 0.1% to 7,817 factors in early buying and selling, whereas the CAC 40 (^FCHI) in Paris rose 0.86% to 7,460 factors. In Germany, the DAX (^GDAXI) was flat at 15,694.

UK economic system flatlines in February

The UK economic system flatlined in February, with no progress in GDP, amid a wave of strikes throughout the general public sector.

The economic system was flat in the course of the second month of the yr, the Workplace for Nationwide Statistics stated, as putting academics, rail staff and civil servants introduced the British economic system to a grinding halt.

The ONS reviews that the companies sector output fell by 0.1%, whereas manufacturing fell 0.2% and building grew 2.4%.

This follows progress of 0.4% in January, which has been revised up from progress of 0.3% within the earlier publication.

Daniel Mahoney, UK economist at Handelsbanken, stated: “Month-to-month GDP (m-o-m) noticed no progress in February by registering at 0%. This was roughly according to consensus (0.1%). The companies sector noticed a marginal fall in progress of 0.1% after displaying extra promising growth in January of 0.7%.

Learn extra: UK economic system grinds to a halt in February amid strikes

“Instructor strikes in February noticed output from the schooling sector fall by 1.7%, which was the biggest contributor to companies displaying a destructive print. Have been it not for industrial motion, February most likely would have posted a touch optimistic GDP month-to-month determine. The disappointing companies numbers have been offset by extra encouraging information elsewhere: for instance, the development sector grew by 2.4% in February, pushed by progress in each restore and upkeep and new work.”

Yael Selfin, chief economist at KPMG UK, stated: “A mix of upward revisions in GDP information and an enchancment in world financial circumstances may assist the UK economic system keep away from a recession this yr. Whereas this can present aid for policymakers, the outlook for progress within the medium-term stays comparatively weak by historic requirements.

“Financial exercise will stay subdued within the close to time period as households proceed to be squeezed by elevated costs and the cumulative impression of previous rate of interest will increase. Though enterprise sentiment continues to enhance, bolstered partly by the autumn in wholesale power costs, we anticipate funding to be constrained this yr amidst the tightening in credit score circumstances and uncertainty about future coverage path.”

Traders are additionally digesting warnings from central bankers that they may proceed to push rates of interest till inflation is beneath management.

The Financial institution of England won’t be diverted from its struggle in opposition to inflation by dangers to monetary stability from greater rates of interest, governor Andrew Bailey stated at an occasion in Washington.

“What we shouldn’t be doing is saying, we’ve bought such an issue with monetary stability that we now have to goal off a choice on financial coverage due to circumstances and monetary stability,” Bailey stated on the Worldwide Financial Fund’s spring assembly.

US and Asia

Throughout the pond, S&P 500 futures (ES=F), Dow futures (YM=F) and Nasdaq futures (NQ=F) have been all within the inexperienced as commerce started in Europe.

Wall Avenue sank Wednesday, reversing positive aspects from earlier within the session, after inflation information confirmed that client worth positive aspects cooled in March and Fed minutes revealed that additional charge will increase have not been dominated out.

The Dow Jones (^DJI) misplaced 0.11% to shut at 33,646 factors. The S&P 500 (^GSPC) retreated 0.41% to complete at 4,091 factors and the tech-heavy NASDAQ (^IXIC) slipped 0.85% to 11,929.

A few of the key takeaways from the minutes of the Federal Reserve’s March assembly — when the central financial institution raised charges by 0.25% — confirmed that employees forecast the economic system would probably slide into recession later this yr. Officers expressed concern in regards to the banking sector issues and scaled again their expectations for charge hikes, whereas some even thought-about pausing the speed hikes.

In Asia, Tokyo’s Nikkei 225 (^N225) climbed 0.26% to twenty-eight,156 factors, whereas the Cling Seng (^HSI) in Hong Kong tumbled 0.16% to twenty,277. The Shanghai Composite (000001.SS) slipped 0.27% to three,318 factors.

FTSE 100

Again in London, the blue chips have been little modified in early modifications with solely Tesco (TSCO.L) edging greater forward after top-end full yr outcomes.

The UK retailer gained 1.80% because it reported top-end income and working revenue figures. It expects working revenue to finish up round £2.63bn ($3.29bn) within the yr to February 25, down from £2.83bn the yr earlier than. Statutory pre-tax revenue halved.

Shareholders will obtain a dividend of seven.05p a share value £516m in June, with the corporate additionally asserting plans for a buyback of its shares value £750m.

Learn extra: Home costs drop amid falling demand as rents maintain rising

Imperial Manufacturers (IMB.L) fell 2% after its buying and selling replace, with the maker of the Gauloises and John Participant Particular saying gross sales volumes have been down from a spike in demand throughout “COVID-related modifications in shopping for patterns”, however that the impression was offset by “robust pricing” for its flamable merchandise.

“We anticipate a stronger web income efficiency within the second half, supported by a normalisation of quantity traits and worth will increase taken in the course of the first half,” it added.

Homebuilders have added 2.2% cent after the Royal Establishment of Chartered Surveyors survey confirmed that the UK’s housing market continued to really feel the pinch of upper borrowing prices in March, however anticipated some enchancment over the yr forward.

FTSE 250-listed Darktrace (DARK.L) rose 2% because the cyber safety agency offset weaker income expectations by revealing improved margin steerage for round 19%.

Pound vs greenback

The pound (GBPUSD=X) pushed greater in opposition to the greenback, buying and selling at $1.25, the very best in over per week, approaching a 10-month excessive despite the fact that the economic system recorded no progress in February.

The greenback weakened yesterday after US inflation dropped to its lowest in nearly two years, boosting hopes that the Federal Reserve would possibly cease elevating US rates of interest quickly.

The identical in opposition to the euro, with sterling (GBPEUR=X) hovering round €1.13.

Oil markets

In the meantime, Brent crude (BZ=F) misplaced floor and was buying and selling at round $87/barrel as merchants appeared to consolidate their positions amid indicators of tightening market and inspiring US inflation information.

A tightening oil market may immediate greater costs within the second half of the yr, the pinnacle of the Worldwide Power Company, Fatih Birol, has stated.

Watch: UK economic system flatlines with no progress in February as strikes hit productiveness

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