Proactive Investors -
- FTSE 100 above day's low of 7,871.43
- UK CPI at 10.1% in March, BoE rate hike expected
- US stock futures weak as more earnings flow
Sterling strengthens
While the FTSE 100 index fell following the stubborn March inflation data, sterling found gains, pushing above US$1.24 as investors bet on a further interest rate hike from the Bank of England next month.
Jane Foley, senior FX strategist at Rabo Research commented: "While the market has reacted to today’s strong UK inflation report, it was already reasonably well priced for further rate hikes. At the end of last week implied money market rates were priced for a Bank rate (currently 4.35%) at 4.60% in 3 months and 4.72% in 6 months. This has now shifted up to 4.79% and 5.00% respectively on the back of the CPI inflation release this morning but also on yesterday’s UK labour data which showed a stronger-than-expected increase in nominal earnings.
"That said, cable has already given back its early gains as the US$ pulls higher against its G10 peers. Although higher for longer is a theme for the BoE interest rate outlook, the market is also assessing this outcome for Fed rates and for other central banks including the ECB, Riksbank, RBA and BoC. This suggests limited scope for fresh, sustainable gains for the pound from this morning’s data.
"Indeed, based on our view that further bouts of US$ strength are likely this year, we see risk of dips to GBP/US$1.20. We maintain our forecast that EUR/GBP is likely to grind higher towards EUR/GBP 0.90 on a 9-month view."
Drug strike
Hundreds of workers employed by pharmaceutical giant GSK PLC (LON:GSK) will stage a series of walkouts throughout May in a dispute over pay, union Unite has announced.
The union said the 750 GSK workers who are members of Unite voted for strike action having rejected the company’s significantly below inflation offer of a 6% pay increase and a one-off lump sum of £1,300. Unite said the offer is a substantial real terms pay cut with the current true inflation rate (RPI) standing at 13.5%.
Unite said strike action will be spread throughout May with workers at all six sites - Barnard Castle, Irvine, Montrose, Ware, Worthing and Ulverston - striking on different dates at different times to maximise the effectiveness of the industrial action.
The workers set to strike undertake a variety of roles at the company and include engineers, process technicians, laboratory analysts, warehouse workers and fire officers, the union said.
Commenting on the action, Unite general secretary Sharon Graham said: “This is an incredibly wealthy company that can fully afford to pay its workers a fair pay offer. This is a classic example of a company seeking to further boost its profits at the expense of its workers.
“Unite has a laser like focus on defending and enhancing the jobs, pay and conditions of its members and the workforce at GSK will be receiving Unite’s complete support.”
A look a some of the top risers and fallers on the junior market
Pendragon Group (LON:PDG) revved up 6% after the motor retailer reported soaring profits for the three months to March 31, 2023.
Cake Box Holdings PLC (LON:CBOX) rallied nearly 6% after the fresh cream cakes retailer reported better trading in the latter half of the year to end-March and predicted full-year profits in line with market hopes.
Redde Northgate PLC (LON:REDD) saw its shares advance 5% to 383p after the company said annual profits are expected to come in ahead of consensus estimates after a strong performance during the year.
Serabi Gold (LON:SRB) fell 14% to 29p after a media investigation accused the company of mining gold in the Amazon (NASDAQ:AMZN) rainforest on disputed land, with licences contested by state agencies and before a nearby Indigenous tribe has been consulted.
Liontrust Asset Management (LON:LIO) shares fell 8% to 860p after it revealed assets under management fell 3.6% in the past three months, driven by an acceleration of net outflows.