Category Investments

Football has an effect

19 July 2004 Angelo Coppola

(19.7.04) The London market continued to be rangebound last week, with the mood nervous amid concerns that the economy might be peaking.

Quentin Smith from OMAM UK reports that early weakness on concerns that Philip Green’s bid for Marks & Spencer might fail, subsequently proved to be correct, was countered by optimism over corporate reporting expectations.

Producer price inflation rose at the fastest annual pace for more than eight years in June, led by petroleum and metals products.

Rising demand for British goods at home and abroad is allowing businesses to pass on higher costs. The cost of petroleum products rose 0.6% in June from May and 9.9% from a year earlier, the largest annual gain since March last year.

Consumer price inflation rose in June at the fastest pace since March 2003 as the prices of televisions, computer games and foreign holidays rose.

Consumer prices rose 1.6% in June from a year earlier, in line with expectations, compared with a 1.5% rise the previous month. On the month, prices fell 0.1% after a gain of 0.4% in May.

Data from the British Retail Consortium showed retail sales growth slowing in June as bad weather and the European soccer championships kept people out of the shops.

Same store sales rose 2.4% from a year earlier, down from 3.7% in May, while total sales increased 5%, down from 6.5% in May.

The soccer championships, held in Portugal, boosted sales of drink and televisions last month, while reducing the overall number of shoppers.

Average earnings excluding bonus payments rose at the fastest pace in two years in the three months to the end of May as economic growth gathered momentum, raising concerns that inflation may pick up.

Earnings rose 4.2% following a 4.1% gain in the quarter to the end of April. The unemployed total fell 9,600 in June to 850,900, the 13th consecutive monthly decline.

This gave a jobless rate of 2.7% in June, down from 2.8% in May.

Over the week the All-Share Index fell 1.1%, led lower by a 1.2% decline in the FTSE 100, while midcaps and smallcaps both lost 0.3%. Mining, aerospace and property accounted for the best sector performances, while the laggards included technology and consumer staples such as pharmaceuticals and health.

London Stock Exchange (+1.1% to 376p), Europe's third largest exchange by market value, posted an 8.5% rise in first quarter sales, helped by increased trading volumes. LSE is competing with rivals Euronext and Deutsche Boerse to be the dominant European exchange.

It is trying to offset a decline in the number of its data terminals by boosting trading on its electronic system SETS, luring companies from other bourses to London and offering trading in Dutch stocks.

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