Sterling held over the psychological pivot point of 2.0000 for the eight consecutive session since breaching the key resistance on June 28th. Bolstered by accelerating June retail sales, the pound fetched 2.0143 in the Wall Street afternoon.
[I][B]U.K. Trade Deficit Narrows in May[/B] [/I]
The buoyant economic growth in Europe and Asia boosted UK exports thus narrowing may trade deficit to the narrowest in more than 1 ½ years.
[I]-Source: Financial Times[/I]
[I][B]FTSE sags 1.2 percent as US profit warnings hit Europe[/B] [/I]
Nervous investors scale back positions in the equity markets as fears about higher global lending rates and commodity prices take their toll on global indexes.
[I]-Source: Reuters UK[/I]
[I][B]U.K. Retail Sales Rise Most Since March, BRC Says[/B]
[/I]Rising the most in three months, the British Retail Consortium showed that revenues on non-food items rose 3 percent from the previous months reading of a 1.8 percent gain. Interest rate worries played a factor in the better-then-expected data as retail analysts? claim that consumers pushed up large purchases before the BoE raised rate to a speculated six percent.
[I][U]Currency Markets:[/U][/I][B] GBP[/B]
Sterling held over the psychological pivot point of 2.0000 for the eight consecutive session since breaching the key resistance on June 28th. Bolstered by accelerating June retail sales, the pound fetched 2.0143 in the Wall Street afternoon. The British Retail Consortium expressed that non-food sales ticked up at the greatest rate since March expanding 3 percent from 1.8 percent in May. Despite poor weather, steep discounts offered by retailers and tightening monetary policy where cited as the catalysts for better-then-expected printing. Capital flow data conveying a narrowing trade gap was another fundamental driver of the cable this trading day. The UK trade deficit contracted in May to its most narrow spread in 1 ½ years as robust economic growth in the BRIC nations stoked exports.
[I][U]Equity Markets:[/U][/I] [B]FTSE 100
[/B]Leading London equities pared back on profit taking as cautious investors wait for signals of sustained market directionality before reinvesting funds. The benchmark FTSE 100 index dipped by the most in more than one month lead lower by slipping metals prices and thin newsflow ahead of Federal Reserve Chairman Benanke?s speech on inflation. The world?s foremost mining firm BHP Billiton fell 3.2 percent to 1492 as copper futures for September delivery dropped 0.4 percent to 3.6045. Also noted was a report in the New York Times stating that BHP has entered into negotiations with private equity firms for a 40 billion tender for US aluminum corporation Alcoa.
[I][U]Fixed-Income Markets:[/U][/I] [B]10-Year Long Gilt[/B]
Sparse economic data forced debt traders to turn to more technical measures as global yields receded. Unwinding of hedges in the long market ahead of corporate bond issuance was referenced by traders as the culprit for the consolidation in bond yields as the 10-year gilt traded down 3bp to 5.508 per cent. Also, vigorous global growth continues to haunt government bond traders as it is a forerunner to inflation affecting the long end of the curve the most.