The FTSE 100 index opened barely changed Thursday at 7253.42 following on from a slightly weaker close in the US markets and a lower tone in Asia.
The prospect of a new escalation of geopolitical tensions over Syria weighed on the market as did the minutes from the US Federal Reserve released Wednesday that showed that US financial policy makers are considering slowing down the US economy. But these concerns were balanced by overall good earnings so far both in the UK and the US, with more positive results expected from big US banks Thursday and Friday.
The Nikkei Stock Average nudged down 0.1% but the Hong Kong’s Hang Seng Index firmed up 0.82%. In the US the Dow Jones Industrial Average closed 0.9% lower on the day while the S&P 500 fell 0.55%.
Stagnant UK property market makes a May rate increase less likely
The Royal Institution of Chartered Surveyors reported that demand from UK property buyers had fallen in March for its 12th consecutive month against expectations of a 2% increase on the month. This could affect Bank of England policy makers when they meet in May as there was some anticipation that the bank may opt to increase interest rates from the current 0.5%. However, a stagnant property market would make this move less likely. More than 9 million UK households have a mortgage, and of that about one half are on a tracker rate which rises in line with the BoE’s interest rates.
Oil prices hit a three-year high
As the rhetoric in Washington becomes more hostile towards Russia and the prospect of imminent airstrikes in Syria becomes more likely, oil prices are responding with a push upwards to the highest level in three years. June Brent crude rose 0.1%, to $72.15 a barrel having closed up 1.4% on Wednesday. May WTI crude firmed 0.3%, to $67.01 a barrel after closing 2% higher the day before.
Mothercare retail sales fall but online traffic is higher
Baby goods retailer Mothercare joined a string of British businesses affected by the cold spell in in February and March and reported that its March sales have fallen, although higher online buying compensated for some of the decline. Mothercare sales fell 2.8% in total over the last 12 weeks but internet sales were up 2.1% and purchases from its own website rose 7.2%. The company said that the footfall in the store continues to be lower and is planning to reduce the number of stores it owns. Additional promotional activity will also be required to revive some of the waning demand.
What a Saga
Saga, the over-50s travel and insurance company which has been hit by the collapse of budget airline Monarch Airlines last year, reported a marginal rise in full-year pretax profit. The company, which specialises in ocean cruises and escorted tours, saw pretax profit rise to £190.1 million from £187.4 million pounds, but warned that the market remains challenging. Brexit woes are affecting not only the travel division of the company but are having an even deeper impact on the insurance part of the business were home insurance premiums are showing signs of inflation. The company declared a final dividend of 6 pence a share which will see its full-year dividend rise 5.9% to 9 pence a share.
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