How low can yuan go? Well today the Chinese yuan fell to its lowest level in 8 years as the dollar moved higher on increased expectations of interest rate hikes under Trump, of course initial focus being on the December Fed meeting. The currency has now lost over 5% against the dollar this year.
The latest set of UK inflation figures were released this morning, showing the CPI slipped to 0.9% in October from 1% in the prior month. This is a somewhat unexpected move considering the movements in the pound would’ve led one to believe these effects would have started to feed through to the British consumer. Obviously as sterling’s value falls relative to other currencies, input costs and so on rise for many firms; these will then look to offset this by passing the cost down the chain, eventually landing on the consumer. One early example was the recent #marmitegate…. but there’s no need to recap that simply nerve-racking moment in consumer history. Signs of pricing pressures are slowly emerging, with prices of goods leaving factories, on top of the raw materials themselves both jumping during the month, the former by 2.1% which is the biggest increase since April 2012. So, it may be taking longer than estimated but it looks to be an inevitability that costs will eventual reach the consumer. Unless of course, firms take a similar approach to Toblerone, a frankly outrageous strategy the internet will rightly punish you for.
Easyjet profits have fallen amid a year of turbulence, with pre-tax profits down 27% in line with October’s profit warning. Terrorist attacks, traffic control strikes and adverse currency movements have all been headwinds faced in the year (ended 30 September). However one underlying positive was that passenger numbers increased by 6.6% and they also confirmed they had set up a continental based airline ahead of the UK’s exit from the EU. Lower fares meant 73.1 million passengers translated into a 0.4% fall in revenue to £4.67bn. At the close shares of Easyjet traded 5.33% higher.
Staying with the domestic market, the FTSE 100 and euro markets alike picked up where they left off this morning, helped by the continued bond sell-off. In the moments following the inflation data releases the FTSE was up by almost 1% before eventually conceding some of these gains to finish the day +0.59%. Oil staged a modest recovery on the day, and as we write sits 5.67% higher. Tesco’s performance today was only bettered by Hikma on the FTSE, as for the 2nd consecutive 12 week period their market share and sales both climbed. If it hadn’t been for the weak commodity trading relegating miners to the bottom of the index, the FTSE would have had a far better day. The likes of Anglo, Glencore and Rio all closing the day down by 6.68%, 5.45% and 4.5%.