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What is to be made of the latest figures from the construction market? Shockingly bad, said one commentator. Dismal, said another. The PMI survey came in at a seven-year low. This reflects sentiment in the sector ahead of the referendum, mainly, which suggests the next figure will be even worse.
The figures came in at 46, in negative territory – most analysts had expected a slight positive. They stalled a brief recovery on the stock market and sent housebuilders’ shares, which had been recovering strongly, into sharp reverse again. The pound fell on the assumption that the stats will put even more pressure on Mark Carney, governor of the Bank of England, to cut rates.
Oh, and gold and silver are up again, suggesting a further flight to safe havens by investors. More doom and gloom from Clarkson, whose shares tanked after a profit warning. The shipbroker said global uncertainty and a surplus of ships on the market meant the shipping industry remained depressed despite the recent recovery in the oil price. Charter rates were therefore down by 30 per cent in the first half of this year against the same period in 2015. The Baltic Dry Index is also heading for all-time lows. The stronger dollar will help Clarkson’s reported profits, but these would still be “materially lower” this year.
Investors in the London Stock Exchange are edging towards acceptance of the merger with Deutsche Börse in the poll today, with a vote in the high 90 per cent area expected. Next week the result from the Börse's investors will be in, with a similar result expected. This is hardly surprising – the shareholders are largely one and the same. The question is what happens now. The Brexit vote will make it difficult for the combined enterprise to be headquartered in London, if we do indeed leave the EU. Some compromise is possible, I am told, perhaps having the official HQ in a neutral country – Amsterdam is not out of the question. We shall see. Columbia Threadneedle , the fund manager, has become the latest financial firm to say it will not be leaving the UK in the wake of the Brexit vote. The company is, however, hedging its bets by beefing up its operations in Luxembourg.
Martin Waller
Tempus Editor
@martinwaller80 |
With construction PMI at a seven-year low it was not surprising to see property developers and housebuilders crowding out the top of the losers’ board this morning. Though the FTSE 100 remained little changed, off fewer than 5 points at 6,573, it was the construction sector that was largely responsible for the losses. British Land was down 25p in early trading at 583¾p, while Land Securities was off 41½p at 997½p. Persimmon, Barratt Developments and Taylor Wimpey were also among the fallers as Brexit fears continued to weigh on the property sector. Like last week it was miners, in particular of the shiny metal variety, that were the standout performers. Fresnillo was up 126p this morning at £18.86, followed by Randgold Resources, BHP Billiton and Antofagasta. Gold itself was up just under 1 per cent this morning at $1,348.80. On the currency markets, the pound was flat against the dollar at $1.3261. Against the euro, sterling was up 0.22 per cent at €1.1933. Oil was up, with Brent crude trading at $50.58, up a little under 0.5 per cent. |
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| A police armoured vehicle runs over pirated DVDs during a ceremonial destruction of counterfeit goods in Quezon city in the Philippines |
It’s the July 4, Independence Day public holiday today, so US markets are closed. For the rest of the week, investors will begin focusing beyond Brexit worries this week to gauge what impact an expected rebound in US job creation will have on the Federal Reserve's stance on rate hikes. Recent signs of stability in US manufacturing, decreased layoffs and solid consumer spending data have suggested that economic growth regained speed in the second quarter, according to Reuters. Minutes of the Federal Reserve’s May June monetary policy meeting are out on Wednesday and they are expected to throw some light on what Fed members made of May’s weak jobs numbers and on the potential risks to the US economy from international developments.
The main data this week is US non-farm payrolls numbers due on Friday, which are expected to show employers in the world's largest economy added 175,000 jobs last month, after May's surprisingly weak reading of 38,000. The unemployment rate is expected to have increased by 4.8 per cent in June, compared with a rise of 4.7 percent in May.
PepsiCo is expected to report second-quarter sales above analysts' average estimate on Thursday, according to Thomson Reuters StarMine. Investors will be interested in comments on the potential impact from Britain voting to leave the European Union and any announcements of further product revamps, after it said it would bring back Diet Pepsi with aspartame and reintroduce Crystal Pepsi.
Alexandra Frean
US Business Editor
@freanie |
| "The extent and speed of the downturn in the face of political and economic uncertainty is a clear warning flag for the wider post-Brexit economic outlook" |
| Tim Moore, senior economist at Markit, on the construction sector's performance last month, which was the worsrt in seven years |
| Up (%) |
| Fresnillo |
+6.0 |
| Randgold Resources |
+4.3 |
| Glencore |
+3.8 |
| Antofagasta |
+3.6 |
| BHP Billiton |
+3.3 |
| * As at noon |
|
| Down (%) |
| British Land |
-6.0 |
| Land Securities Group |
-5.4 |
| Persimmon |
-4.9 |
| Marks and Spence Group |
-4.3 |
| Barratt Developments |
-4.2 |
| * As at noon |
|
| FTSE100 |
6567.12 |
-0.16 |
| FTSE250 |
16135.01 |
-2.01 |
| Cac |
4257.76 |
-0.38 |
| Dax |
9748.03 |
-0.29 |
| BrentCrude |
50.52 |
+0.17 |
| Gold |
1,351.75 |
+1.12% |
| GDP/USD |
1.3251 |
-0.08 |
| GDP/EUR |
1.1911 |
+0.05 |
| 10Y gilt |
109.855 |
-0.13 |
| * As at noon |
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