Market update

Well the ‘IN’ EU mob did a poor job of scaring equity punters away from their fodder today.  They spent most of the day in the trough gorging themselves on the fayre on offer – FTSE 100 +140 at 6008 at 3.45pm! – Virtually every sector is up – oil +2%, mining +2.5%, drugs +2%, Banks +6%, thanks in the main to Lloyds’s 13.4% leap to only 2.5p short of breakeven.


A huge number of companies posted results today – BATS +1.25%, RSA +10% and BT +5% on news of a deal on BT Openreach. Despite the performance of Lloyds and RSA the yellow jersey will probably go to Serco – +15%. Well done Rupert Soames! So glad it has started to come right. The Media sector also did well – UBM +8% and Reed Elsevier +3%. Rentokil’s efforts were pleasing – +2.5%. Merlin seems to have turned around – +4% today.


There were also casualties on the day – Capita lost their chairman -5% and Premier Oil was friendless in the ring – -6%.


The Street of Dreams is only 15 points – oh no not again tomorrow!   





Panmure’s SIMON FRENCH made a few salient comments on UK GDP – This is a quick summary of the 2nd estimate of GDP released this morning which saw UK growth unchanged from the 1st estimate.




  • UK Growth unaltered from 1st estimate of 0.5% QoQ, 1.9% YoY


  • All the growth coming from dominant services sector. The negative headlines out of manufacturing and construction are somewhat irrelevant from a UK growth perspective.



  • Some evidence of slowing distribution, hotels and restaurants sector in the December Index of Services. This is the one to watch ahead of the National Living Wage introduction in April



  • Worth noting that a huge proportion of UK growth (I estimate 5% of GDP growth since 2004) is due to net migration. This morning’s migration estimates (+323,000 annual to end Sept) are good news from this perspective. GDP growth per capita growth is actually near flat since 2008 while overall growth has run ahead. The importance of labour supply expansion to the UK growth story cannot be underestimated.



  • The UK’s Trade Deficit remains a drag on UK GDP, but recent Sterling weakness can be expected to moderate this impact in the coming months. UK growth continues to outperform EU and G7 benchmarks – a pattern it has shown since early 2013.

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