Sterling prevailed across the board today as the currency appreciated against its major trading pairs. In mid-day New York action; the pound capitalized on broad yen weakness stemming from BoJ rhetoric and carry-trade positioning.
Out of the 20 European Union nations Britain?s minimum wage comes in the third highest. This important wage level makes it possible for over 1 million workers to feel financially stable.
- "UK minimum wage third highest in EU"
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-Source: Financial Times
Tesco slid 4.9 percent upon reporting a slowdown in UK sales growth in the first quarter. They are bearish on firm?s fiscal year as interest rate hikes limit consumer spending.
- "Tesco leads FTSE decline"
FTSE down in thin trade as Tesco weighs | Reuters
-Source: UK Reuters
In an effort to boost margins, Cadbury Schweppes Plc will cut 15 percent of the workforce at its candy unit. Shares of Cadbury fell 0.9 percent with the stock adding 28 percent year-to-date.
- "Cadbury to Cut 7,500 Jobs, Says Drinks Sale Probable"
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[B][U]UK Market Activity:[/U][/B]
Sterling prevailed across the board today as the currency appreciated against its major trading pairs. In mid-day New York action; the pound capitalized on broad yen weakness stemming from BoJ rhetoric and carry-trade positioning. This environment lofted the pound higher to realize a 15-year high against the yen of 245.23 (+0.6 percent). Amidst the backdrop of upbeat U.K. housing data, the cable rose 0.3 percent to $1.9824 against the dollar for the third consecutive day. Europe?s second largest economy, of which, boasts the highest interest rates among the G7(5.5 percent); has been inundated with investor speculation of further BoE tightening. This ongoing sentiment has made the sterling increasingly more attractive to investors and is charged with stoking the pound.
London equities declined (0.50 percent) as the blue-chip (FTSE 100) index closed the session at 6672.20. Positive 7.8 percent year-to-date; benchmark heavyweights Tesco and British Airways emerged as the session?s laggards leading the index lower with contractions of -4.2 and -3.10 percent respectively. Tesco, which currently holds the title of U.K.?s largest retailer, offered a downward revision of firm guidance after citing slowing sales growth, contracting consumer spending, and rising interest rates as factors. Furthermore; mounting global government debt yields (which historically has adverse implications for equities) could surface as an additional element dragging down the FTSE 100 going forward.[/I]
Despite indications of housing price growth and continued BOE hawishness; yields on the 10-year gilt finished -3bps at 5.45 percent. Near a 7-year high, the gilt, is currently yielding a 357 point premium to the Japanese key bond making it prime recipient currency of carry-trades (borrow low yielding currencies to invest in higher-yielding units). Debt traders have a sparse array of data this week to induce action, putting further emphasis on tomorrow?s minutes outlining the June 7th Bank of England meeting. This economic event will weigh heavily on global and domestic fixed-income markets alike as implied yields on the December interest-rate futures (+5 bps this month) convey increased investor speculation of higher rates.[/I]
[/I] [I]Source: Bloomberg[/I]