Sainsbury’s Asda-merger fuelled surge, and sterling’s dove-led slump, propelled the FTSE to fresh highs this Monday.
The FTSE jumped half a percent as the day went on, leaving the index teasing 7550 for the first time since the 1st February. With Tesco (LON:TSCO) reducing its losses, and Morrisons actually switching from red to green, the UK index was able to view Sainsbury’s 17% climb as a caveat-free market positive. WPP (LON:WPP) also played a part in the FTSE’s gains this Monday; the beleaguered advertising firm rose 7.5%, not thanks to its Q1 results, which saw a 4% drop in revenue to £3.6 billion, but on speculation that the business could be split up now that the glue of Martin Sorrell has disappeared.
It wasn’t just equities action driving the FTSE to its effective 3 month peaks. Sterling, which a fortnight ago was hitting a bevy of highs on the expectation that the Bank of England would be raising rates in May, has extended its second half of April collapse following last Friday’s super-dovish Q1 GDP reading. Against the dollar the pound is down 0.4%, leading it towards a sub-$1.375 15 week nadir; against the euro, meanwhile, sterling has slipped a further 0.2% to sit at a 6 week low of €1.135.
Turning to the afternoon and the Dow Jones is still trying to reclaim the losses suffered during last Tuesday’s bond yield-fearing plunge. The futures have the Dow jumping 100 points when the bell rings on Wall Street, a move that would take the index back above 24400. That basically cuts the difference between the 24100 levels it started April at, and the 24750 one month highs struck a fortnight ago. In terms of data, the main focus this Monday will be on the core PCE price index, especially since there’s a Fed meeting on Wednesday; analysts are expecting the inflation metric to come in unchanged at 0.2%.
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