Battered pound boosts FTSE

Wall Street and stocks in Asia fell overnight, dragged lower by a disappointing update from the world’s largest contract chipmaker Taiwan Semiconductor Manufacturing which has served as a warning for smart phone demand, puling the wider sector lower. The Dow closed 83 points off whilst the S&P and the tech heavy Nasdaq closed 0.6% and 0.8% lower. European bourses traced global stocks lower, yet despite the softer finish for US and Asian equities the FTSE jumped higher supported by a weaker pound.

Carney hits the pound

The pound plunged yesterday through $1.41 yesterday evening after Bank of England governor Mark Carney set investors straight over a potential Spring rate rise. Even though wage growth data, inflation and retail sales all missed expectations across the week, the markets were still optimistic that the BoE could hike rates when they meet in May. Carney poured cold water on market optimism for a Spring hike, suggesting that investors were not looking closely enough at the data, whilst reminding the wider market that the central bank could hike in other months through the year. As perceived odds of a rate hike dropped to just 40%, from 88% at the beginning of the week, the pound also plunged, pulling $1.40 into target, dropping over 300 points since Tuesday.

Reckett Benckiser results highlight troubling trend in consumer goods

Reckett Benckiser fell to the bottom of the FTSE dropping over 7% despite confirming it is on track to return to full year revenue growth after a solid first quarter. However, investors were not in a forgiving mood this morning and sold out of the stock as revenue increased 2% in the first quarter, missing expectations of 2.6%. The rather lacklustre figures highlight the struggles that consumer goods companies are facing as increased competition from drug store chains and e-tailers such as Amazon often means price increases are out of the question. Share in Reckett Benckiser fell sharply this morning, extending losses since May last year to an eye opening 33%.

Shire slumps 3% on takeover battle disappointment

Shire moved 3% lower in early trade giving up some gains from the previous session after the potential takeover battle between Allergan and Takeda is over before it started. Shire rejected Japanese Takeda’s $63 billion, although they remain in talks, whilst Allergan has dropped its pursuit of Shire, almost as quickly as it announced it. Allergan, which has a market cap of $50 billion, is currently sitting on debt of over $30 billion following a string of acquisitions, which is limiting its ability to be a serious contender for any large scale acquisitions.