Despite the Dow Jones’ latest all-time high on Tuesday night, the markets were pretty subdued on Wednesday morning, in part muted by a DAX-removing German Bank Holiday.
The FTSE could only nudge up 15 or so points as the session got underway. However, that was enough to cause the index to once again eye 7500, a nice little turnaround from Tuesday’s sub-7450 intraday lows. That Brent Crude has returned to $85 per barrel has helped; with the black stuff nearing a 4 year high, BP (LON:BP) is continuing to lurk around £6, a price not seen since 2010 (Shell (LON:RDSa), meanwhile, is still a bit off May’s £27.50-highs).
Yet there were other factors keeping the FTSE from fully letting rip. Tesco (LON:TSCO) has replaced Royal Mail (LON:RMG) as the headline drag on the index, despite posting a set of half year results that couldn’t be further from the postal firm’s profit warning at the start of the week. Thanks in large part to the integration of Booker, group sales at the supermarket giant were up 13% to £28.3 billion, with UK and Ireland like-for-likes jumping 3.8%. However, an initially impressive 24.4% surge in group operating profit to £944 million was actually well short of the £978 million forecast by analysts, leaving Tesco with a near 6 month-low hitting 5% decline.
As for sterling, it managed to claw its way back above $1.30 against the dollar following a 0.2% increase, though wasn’t so lucky against the euro, where it dipped 0.1%. It could be a potentially big day for the pound; not only is there September’s services PMI – expected to slip from 54.3 to 54.0 – but Theresa May’s no doubt Brexit-heavy address at the Tory conference. May doesn’t have the best relationship with sterling of late, so it is going to be interesting to see what impact the PM’s speech has on the currency as the day goes on.
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