Bthe mixed recovery in ritain and the shock of US inflation figures above 6% today have kept the economic outlook at the forefront of investors’ thinking.
Figures from the Office for National Statistics showed the UK economy grew 1.3% in the three months ending September, below expectations of 1.5% but offset by a longer period end. strong than expected.
The update kept pressure on the British pound after the US dollar surged yesterday, as an inflation figure of 6.2% raised expectations for the Federal Reserve’s first interest rate hike since start of the pandemic.
The FTSE 100 index gained 1% yesterday with Burberry, B&M European Retail and WH Smith being part of today’s updates.
Auto Trader leads FTSE 100 higher
In the wake of Marks & Spencer and ITV yesterday, it was Auto Trader’s turn to post a double-digit increase in its share price today.
The stock listed on the FTSE 100 jumped 11% or 65.8p to 686p, after posting its highest profits on record in six months thanks to the boom in the used car market and the online change brought about by the pandemic.
However, there have been sharp swings in the share price in the other direction, with Johnson Matthey down 17% after indicating that full year results would be below expectations amid supply chain pressures and of the work force.
It is also continuing to sell its battery materials business after deciding that the returns were not sufficient to justify an additional investment.
Shares of Burberry and B&M European Retail fell 8% and 6% respectively after their interim results. The FTSE 100 index improved 21.43 points to 7361..58, helped by strong performance in mining and banking stocks.
Pound weakens after GDP update
The pound came under more pressure today, trading below 1.34 against the US dollar after the latest GDP figures painted a mixed picture of the UK recovery.
Former Monetary Policy Committee member Andrew Sentance tweeted: ‘Swings and roundabouts in the latest UK GDP figures. The overall picture is slightly weaker than the Bank of England expected in the third quarter despite rising 0.6% in September. “
The figures to some extent support the surprise decision by the Bank of England last week not to raise interest rates from 0.1% to 0.25%.
This accelerated the reversal of the British pound from the $ 1.38 seen in mid-October, with the greenback strengthening overnight after expectations of a US rate hike were put forward by the inflation figure. of 6.2% of the country for October.
Rivian leaps, Musk sells Tesla shares
Wall Street rushed to buy shares in Rivian Automotive after the electric car maker debuted on the Nasdaq yesterday at an initial valuation of $ 66.5 billion (£ 49 billion).
The startup, which didn’t start delivering its first R1T pickup until September, briefly touched the $ 100 billion mark before shares closed up 29% to give the US-based company. Illinois has a market value similar to that of one of its major shareholders, Ford.
Rivian is seen as a rival to Tesla, which was recently valued at over $ 1,000 billion. Tesla shares closed up 4% last night to reverse 16% losses in the previous two sessions as it appeared boss Elon Musk had sold around $ 5 billion in shares.
The move came days after Musk’s Twitter followers voted to sell 10% of his stake, worth around $ 21 billion.
Burberry sales rebound to pre-Covid levels
Burberry’s first-half sales have returned to pre-pandemic levels, but the fashion business still suffers from lower tourism in some areas.
UK retailer FTSE 100 said revenue in the six months to September 25 reached £ 1.2bn, up from £ 878m a year earlier when lockdowns and travel restrictions hit the luxury goods sector.
The company added that performance has recovered to match 2019 levels.
UK economy is almost back to pre-Covid levels
The UK economy continued to recover from the Covid-19 crisis over the summer, growing 1.3% between July and September.
That’s a slower pace of recovery than in the previous quarter, due to supply chain issues that hurt retailers and other businesses, including automakers.
However, the numbers mean the economy is not far from recouping all of its pandemic losses. The city’s economists are not there, which is a striking achievement, given that it took five years to bounce back from the 2008 global financial crisis.
Inflation fears stalk the markets
European markets ignored yesterday’s higher-than-expected US inflation figure, but Wall Street was not so resilient after the Dow Jones Industrial Average fell 0.7%.
The drop came as October’s consumer price index hit its highest level in 31 years at 6.2%, with base prices also rising to 4.6% to add to fears that the pressure on prices does not last longer than the policymakers of the US Federal Reserve had hoped.
Michael Hewson, Chief Market Analyst for CMC Markets, said: “The fear is that consumers as well as markets will have to absorb further price increases, with all the inherent risks that this entails for companies’ profit margins and markets. consumer inflation expectations. “
The dollar gained 1.2% against the pound in the wake of inflation figures as Wall Street raised expectations of a first interest rate hike next summer.
Strong earnings updates and a sharp rise in several mining stocks after inflation numbers triggered a flight to gold helped the FTSE 100 index close 1% higher last night.
The Elite is expected to open 20 points lower at 7320, with weak performance in Asian markets adding to expectations for a more gloomy session in London today.
Better-than-expected updates to a number of consumer stocks supported yesterday’s strong session, pushing Marks & Spencer stocks up 16.5% and ITV up 15%.
Their optimism was highlighted by today’s GDP figures, where the 0.6% figure for September was higher than the city’s forecast for 0.4% growth. Third quarter performance was 1.3%, which compares to the 5.5% rebound seen in the previous quarter.