Despite being up on the dollar yesterday, economists reported that sterling is still underperforming against the greenback compared to its December high. This is thought to be a result of looming recession fears and the warnings of continued belt-tightening from Hunt in his Autumn statement.
On the other hand, the picture for the stock market looks brighter as equities in London extended gains for the fourth consecutive session on Monday. The benchmark FTSE 100 stock hovered near record levels above 7,850 points yesterday. This followed gains in financials which offset losses in the materials sector.
In industrial action news, on Monday, the National Education Union reported that teachers in England and Wales have voted for strike action by huge majorities. However, in England, despite 84% of teaching support staff voting in favour of strikes, they did not meet the 50% turnout threshold for a strike vote to be valid.
Today the European Central Bank’s member of the supervisory board, Edouard Fernandez-Bollo will give a speech on how the bank plans to tackle inflation. In the ECB’s December meeting, the bank raised interest by 50 basis-points, taking the deposit facility to 2%, the refinancing rate to 2.5% and marginal lending to 2.75%, levels not seen in over a decade (14 years).
In other markets, European stocks were slightly up on Monday, with the STOXX 600 extending its 2023 rally to a nine-month high and Germany’s DAX 40 adding 0.3% to trade above 15,120 for the first time since mid-February, helped by hopes that the worst of the global price squeeze is over and optimism about China’s re-opening.
Producer price inflation and retail sales take centre stage tomorrow as markets keenly await the latest data releases for both. In previous PPI data, the index for final demand in the US rose 0.3% month-over-month above market forecasts of 0.2%. The index is expected to dip by 0.1% in Wednesday’s release.
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