01 May 2012: Sterling under pressure, China’s PMI strong

  • Sterling undermined, Euro, FTSE 100 and Copper look strong: Disappointing manufacturing data has put the Pound under pressure, and draws attention towards the perilous state of UK’s economy. FTSE 100 shows indifference to this, and has gained 0.2% today, despite BP losing out.
  • Stocks: FTSE Eurofirst is flat at 1043; However, in Asia, Tokyo lost a staggering 1.78%; S&P 500 traded 0.4% lower in the previous session; FTSE 100 has added 0.2% today and is at 5750
  • Currencies: Euro has gained 0.11% against Dollar and is at $1.3256; Sterling fell to a low of 1.2199 against Euro, a drop of 0.5%
  • Debt: US 10-years at 1.92% and Bunds at 1.67% are both flat as are Gilts at 2.11%
  • Commodities: Brent Crude lost 0.1% to $119.32/barrel; Copper gains 0.53% and is at $3.85/pound; Gold loses 0.07% at $1662/ounce
  • China’s PMI strengthens: China’s PMI (a useful economic indicator) has risen to its highest in more than a year. While the official govt. target for GDP growth is 7.5% this year, China is expected to surpass this.
  • Australia cuts rates to support economy: The Reserve Bank of Australia cut rates dramatically to boost the growth of their slowing economy. The rates have been cut by 50bp to 3.75% now, which is a ‘appropriate borrowing level’ as stated by the RBA’s governor. This move saw the AUD fall a full percent against Dollar, but the Australian Exchange, ASX 200 rose 32.9 points to a nine-month high.
  • Etihad takes 3% stake in Aer Lingus: Etihad has bought a 3% stake in the Dublin-based carrier, in agreeing a code-sharing deal. Aer Lingus holds one of the biggest landing slots at London’s Heathrow airport. EU rules would prohibit Etihad from buying a controlling stake in Aer Lingus, but the companies are said to be working towards a strategic partnership.
  • BP profits undershoot expectations: BP posted profits much lower than expectations. The profits of $4.8 billion were a big drop form last year. BP’s production was 3.47m barrels a day, a drop of 6% from last year, as it continued to divest assets to pay for Deepwater Horizon liabilities. BP was last year, involved in the worst off-shore oil spill, which killed 11 people. BP are paying $7.8bn in compensation, but a trial is also pending.

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