MARKET UPDATE

Inflation rose to 3.1% in November, the highest in nearly six years, as the squeeze on households continued, though it was mainly down to transportation (airlines) cost, with some carriers capitalising on the demise of Monarch, according to the Office of National Statistics, which posted this data at 9.30am. Also the cost of computer games is on the march. Core inflation remains steady at 2.7%

The most recent data shows that average weekly wages are growing at just 2.2%. Mark Carney, the Governor of the Bank of England, will now have to write a letter to Chancellor Philip Hammond explaining how the Bank intends to bring inflation back to its 2% target. Mr Carney has to write a letter to the chancellor if the Consumer Prices Index (CPI) inflation rate is above 3% or below 1%. With the Pound more resilient than it was last year many economists are of the opinion that inflation should start to come down in 2018. Therefore it would be a surprise if the MPC were to hike rates by 0.25% on Thursday.

Though we have seen signs of a ‘Santa Rally’ at the start of the week, it is hard to be really positive in thinking there is some measurable momentum behind this push, though fund managers will come in to cash resulting in tracker funds benefitting from this largesse. At 11.35am the FTSE 100 is up 19 points at 7472. Oils in the form of BP and Shell are strong on the back of a firmer crude oil price. The everyday perennials such as GSK, Astra, Diageo and Reckitt Benckiser have all added a few coppers here and there. Banks have been uninteresting and as a sector are down 0.25% on average.

 

Of those companies that reported today, sadly Carpetright came out with another marginal profits warning – down 6%. Robert Waters posted an encouraging outlook with more contracts in the bag – +7.5%. Drax’s efforts were uninteresting – down 2%. Balfour Beatty’s show looks like it may be back on the road – +1%. The DOW futures are up 25 points at present.

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