London markets were flat Wednesday as investors weighed strong economic data from Asia against weak U.K. figures, as well as the latest attempt to move Brexit forward.
How did markets perform?
The U.K.’s FTSE 100
was roughly flat at 7,389.3. Investors may have been taking a breather following Tuesday’s 1% gain.
rose 0.3% to $1.3173 on Wednesday after closing down nearly 0.9% the previous day.
What’s moving the markets?
More positive survey data out of China, following Monday’s encouraging manufacturing figures. The Markit/Caixin Purchasing Managers’ Index (PMI) survey for services leapt ahead in March, going from 51.1 in February to 54.4 in March, indicating that the country’s economy is strengthening. Positive signs also came out of the eurozone final services PMI which surprised at 53.3, versus consensus of 52.7.
U.K. economic data was disappointing, with CIPS Services PMI, seasonally adjusted, falling into contraction at 48.9, undershooting analysts’ estimates of 50.9. The figure offered a counterpoint to the strong manufacturing PMI readings earlier in the week, which were viewed as driven by stockpiling ahead of Brexit. The report didn’t seem to have much of an impact on the U.K.’s FTSE 100 index, however, which was flat Wednesday.
Remarking on action in the FTSE 100, Ian Williams, economics and strategy research analyst at Peel Hunt, noted, “The style factors have been evenly-matched in recent sessions, underlining the broad nature of the recent advance.” While fears of a global economic slowdown haven’t been entirely allayed, investors will take the good news, at least for now.
To some, U.K. Prime Minister Theresa May’s statement Tuesday night following 7 hours of cabinet meetings seemed like capitulation. May said she would seek a longer Brexit extension from the European Union and that she wanted to work with the opposition Labour Party to find a solution, which would almost certainly require her to move her ‘red lines’. But a more cynical take is that with general election maneuvering already under way, May wants to find a way to pin the impasse on Labour leader Jeremy Corbyn rather than schisms within the Conservative Party.
Which stocks are active?
U.K. luxury fashion company Burberry Plc
was stung by JPMorgan analysts cutting their full-year profit forecast, on the grounds that volatility in the pound could cost them in various Brexit scenarios. It fell 4%.
U.K. clothing brand Superdry Plc
plunged 11.9% Wednesday after co-founder Julian Dunkerton won a shareholder vote to allow him to rejoin the board. The CEO and chairman immediately stepped down, as did four other directors. “Since January last year the share price has fallen off a cliff from peaks of 2101p, a decline of over 75%,” wrote Michael Hewson, chief market analyst at CMC Markets UK, “so it is clear that radical surgery is required. The big question is whether Julian Dunkerton is the man to do it.”
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