The FTSE popped briefly higher on the open following a strong end in Wall Street last week and a positive session in Asia overnight. Investors were still cheering to near market perfect non-farm payroll report on Friday, which saw the number of jobs created smash expectations at 313k, whilst wage growth dropped, back to just 2.6% year on year, easing concerns over a faster rate of interest rate hikes from the Fed.
Whilst the rate rise in March is considered a dead cert, there are several high impacting data releases this week which could influence the Fed’s decision as to whether a fourth-rate raise is potentially manageable this year. These are inflation data on Tuesday and retail sales figures due for release on Wednesday and consumer sentiment on Friday. Strong readings across the week could wipe out the serenity that Friday’s weak wage growth gave to the market over future inflationary pressures.
Melrose ups its bid on GKN (LON:GKN) to £8.1 billion
On the FTSE, GKN has been battling a hostile takeover by Melrose since early January. In a last-ditch attempt Melrose (LON:MRON) upped its third and final bid to £8.1 billion. Previous bids by Melrose have not even be entertained by GKN given they were only 420p per share, well below the 435p where Melrose was trading on Friday. This new offer of 467p per share could be sufficient to sway shareholders, giving them 60% of the combined group.
Consumers still struggling under challenging conditions
Data from Visa highlights the struggle faced by the high Street, as consumers hold back on spending. This winter is proving to be extremely harsh on the high street as consumer spending on Visa is at the weakest rate since 2012. Down 1.1% in February from a year earlier adding to January’s 1.2% drop, its little wonder why retailers are falling in quick succession. With consumers tightening their belt as they battle a toxic combination of higher prices and lower wages in real terms, retailers will be desperately hoping for and change of air and some warm spring weather to lure customers out onto the high street.
Despite the discouraging news, retailers Marks and Spencer (LON:MKS), Next (LON:NXT) and Sainsbury’s (LON:SBRY) featured hi on the FTSE leader board.
JustEat Sinks on Downgrade
Meanwhile, Just Eat (LON:JE) was a clear loser, down over 4% in early trade as investors jumped out of the success story following a down grade from Goldman Sachs (NYSE:GS). Whilst the food delivery giant has had a phenomenal rise over the past few years, concerns the success story might be coming to an end are refusing to budge. Just last week JustEat announced 2017 losses of £76 million compared to pre-tax profits of £91 million, coupled with today’s downgrade and market participants are looking elsewhere to invest their cash.
Trump’s Trade Tariffs
With no high impacting data from the UK or the US across the afternoon, investors will continue digesting developments in Trump’s trade tariffs. Whilst Australia has been removed from the hit list, Europe and China remain firmly in the firing line with the likes of Germany and China expecting a deterioration in global growth and trade.
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