Friday, 1 April: Overnight Asian trade was relatively weak, predominantly in the Nikkei 225(-3.55%) and this weaker sentiment on Japan filtered into our European trading session, with the FTSE 100 closing down 0.47%. This Japanese weakness arose due to a disappointing Q1 Tankan survey, as a survey of large manufacturers fell 6pts to 6 last quarter (vs. 8 expected), along with a disappointing read on the outlook index. More disappointing news also emerged from smaller manufacturers.

Sainsbury’s stuttered in early morning trade as it announced the acquisition of Argos is expected to complete in the third quarter of this year. Sainsbury’s will pay 55.0p per share in cash, plus 0.321 Sainsbury’s shares to acquire Home Retail, valuing the company at £1.2bn. Sainsbury’s said the deal values the catalogue company at a premium of approximately 74% to its closing price on January 4, the day before the grocer disclosed its offer. The acquisition will also have to be approved by the UK Competition and Markets Authority.

Recent data showed that British house prices rose at their fastest annual pace in over a year, a sign that buyers looked to buy before the introduction of surcharge taxes on buy-to-rent properties and second homes. House prices were 5.7% higher in March compared with the same month last year, from a 4.7% gain in February. For the month, house price growth rose to 0.8% from 0.4%.

Today also saw the release of UK Purchasing Managers Indices which underwhelmed analysts’ consensus estimates and currency traders alike. The March PMI print came in at 51, below a forecast of 51.4. In the aftermath Sterling fell against the euro to its lowest in 15 months, while extending its depreciation against the dollar. The pound dropped to 0.7964 from 0.7934 before the announcement, with the pound falling to $1.4335 from $1.4361 beforehand.
At the close European indices were down with the FTSE 100 -0.47%, with the CAC 40 -1.43%, and the DAX 30 -1.71%.