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Gold and oil prices retreat
Gold and oil prices fell back on Monday after tensions between Israel and Iran seemed to simmer down over the weekend following the former’s strike on Friday morning.
Gold was down 1.1% compared to Friday at US$2,361 per ounce, having soared as high as US$2,415 in the aftermath of Israel’s strike, which came following an Iranian attack a week earlier.
Benchmark Brent crude oil fell 0.6% to US$86.66 a barrel over the same period from Friday evening. It had climbed as high as US$90.69 during the early hours of the day.
Iran had reassured on Friday that an immediate retaliatory strike was not planned on the back of Israel’s attack.
Analysts noted that blows between the two had thus far been shows of force rather than acts looking to incite all-out war as a result.
That said, “the general fragility of tensions in the region remains close to the surface and is clearly playing on investors’ minds,” interactive investor’s Richard Hunter point out on Monday.
Elsewhere, the pound slipped to a five month low against the dollar of US$1.23 on speculation the Federal Reserve will keep rates higher for longer across the Atlantic.
Gas slipped 1% to 76.35p per British thermal unit in the meantime as supplies across Europe remained abundant despite a cold snap on the continent.
Market prices in August rate cut
Traders have repriced in a first cut to base interest in August by the Bank of England.
Having scaled back expectations last week, rate futures on Monday morning showed a 25 basis point cut in August, stretching to 54 basis points by December.
A higher-than-expected inflation reading for March had left traders pricing in just one full cut for the year.
Comments from Bank of England deputy governor Dave Ramsden that UK inflation fundamentals seemed to be improving appeared to reinvigorate optimism though.
“Over the last few months I have become more confident in the evidence that risks to persistence in domestic inflation pressures are receding,” he said in a speech in Washington on Friday.
“The balance of domestic risks to the outlook for UK inflation, relative to the February Monetary Policy Report forecasts, is now tilted to the downside.”
Asda updated somewhat misleading - analyst
Asda’s delayed trading update was “sketchy”, with a focus on adjusted earnings somewhat misleading, according to Shore Capital analyst Clive Black.
“At a headline level [the results] show progress, especially in debt reduction,” Black noted following the results, which showed earnings up 24% at just over £1 billion and debt of £3.8 billion.
However, depreciation and finance costs matter, he added, with sources suggesting £441 million was spent on the latter over the year.
Asda had claimed it was the UK’s second-largest supermarket, which Black argued “share somewhat misses the point” given volume loss and market share erosion.
“Capital expenditure appears very light at the present, which raises questions about the level of investment in maintaining its core supermarket estate.
“How Asda's trading strategy evolves will be of sector interest,” Black continued, “we expect ongoing rationality”.
He added Lidl, M&S, Sainsbury and Tesco (LON:TSCO) had “seemingly better assortments, dynamics, store standards, momentum and balance sheets [...] to defend their market positions”.
J Sainsbury PLC (LON:SBRY) climbed 3.6% on the news, with Marks and Spencer (LON:MKS) gaining 3.1% and Tesco PLC 2.4%... Read more
House prices increase as sales rebound
House prices have increased at their fastest annual pace in a year, property firm Rightmove announced on Monday.
At £372,324, average prices have climbed by 1.7% on a year ago, and by 1.1% on last month, Rightmove said in a report.
This comes as the number of sales agreed jumped by 13% compared to April last year, bringing the figure in line with 2019 levels.
“It has been a positive start to the year in comparison to the more muted start to 2023,” Rightmove director Tim Bannister commented.
“However, agents report that the market remains very price-sensitive, and despite the current optimism, these are not the conditions to support substantial price growth.”
Rightmove added average prices were nearing a record high, recorded in May last year, with top-of-the-ladder homes buoying values after enjoying the strongest start to the year since 2014.
Persimmon PLC (LON:PSN) was among housebuilders rising on the news, up 2.6%, with Bellway PLC (LON:BWY) and Taylor Wimpey PLC (LON:TW.) also climbing 1.5% and 1% respectively.