Pound sinks as retail sales drop
|A larger than expected drop in UK retail sales has weighed on the pound, with sterling dropping to its lowest level of the week against the US dollar shortly after the release. Against consensus forecasts for a 0.1% decline M/M the -0.8% print is a clear disappointment and comes after three consecutive above forecast readings for this economic indicator. The data suggests that consumer spending has weakened and the pound is now looking increasingly susceptible to a larger pullback. The fall in sterling has provided a quick boost to the stock market, with the FTSE 100 bouncing strongly from its lowest level in more than a week after the data dropped.
FTSE recovers on Black Monday anniversary
Stocks had gotten off on the wrong foot this morning as the Catalan independence tensions ratcheted up another notch with reports that Madrid is planning to invoke Article 155 imminently. In effect would see the central government take total control of the region. Today marks the 30th anniversary of Black Monday which saw the largest single-day decline seen in US stocks in their history. With stock markets in the US setting more record highs yesterday doom mongers suggest that a similar drop could lie ahead but the price action at present is markedly different. The Dow was already 17% off its record highs in 1987 heading into Black Monday and given the extremely low levels of volatility seen recently there is little to suggest that we’ll get anything but a continuation of the slow and steady grind higher that has been evident throughout much of the year. Markets don’t crash from all-time highs.
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