Wednesday, 18 January: After significant movements on Tuesday for both the FTSE and pound, of course in reaction to Theresa May’s speech, Wednesday in comparison began far more subdued. To recap, yesterday the FTSE 100 eventually closed 1.46% lower as the pound rallied to session highs of +3.05% against the US dollar, bettering daily gains seen during 2008 for the best day since 1993.

At the open the FTSE moved a tad higher and sat around the 7,230 mark for most of the morning and sterling against both the dollar and euro slipped c.50 bps. On the index, one of the main stories of the day was from Pearson, as shares plummeted at the open by over 25%. The world’s largest education company issued a profit warning for 2018, warned of lower future dividends and outlined the intention to sell its 47% stake in its Penguin Random House publishing joint venture. Pearson shares have been battered over the last few years, they’ve laid off thousands of jobs and been pressured into ditching assets such as the Financial Times newspaper their interest in the Economist magazine…. The shares closed just over 29% lower – Hard times.

Elsewhere, Burberry reported Q3 revenue growth to beat analyst expectations and Ladbrokes Coral reported operating profit was again in line with market expectations despite the ‘unfavourable’ sporting results. These must be in sports I’ve never heard of clearly. JD Wetherspoon has seen a comparable Q2 sales rise and expects the HY margin to increase. Mitie Group has announced they expect underlying operating profit to be between £60-£70m, far lower than the £128.9m achieved a year earlier.

UK unemployment in the three months to November fell once again, taking the jobless rate to an 11 year low 4.8%. In the period unemployment decreased by 52,000 to 1.6 million with wage growth excluding bonuses picking up by 2.7% compared to a year earlier.

Further on in the day US industrial production figures revealed a rebound in December, rising by 0.8% (est: 0.6%). This was mainly from the big boost from utilities that benefitted from the cold weather, but manufacturing did have a small climb. Which is timely as information released this afternoon shows that 2016 was the hottest year on record.

Back to the Brexit, two large investment banks have weighed in today, with both UBS and HSBC saying some workers will definitely have to move abroad when the UK exits the EU. Both have estimated around a 1,000 staff may have to be relocated (the HSBC CEO has said their employees will move to Paris). After speculation last year HSBC have already confirmed their global HQ will remain in London.

Concluding, the FTSE closed 0.38% higher on the day, helped by decent company updates and economic data, as well as the rebound action from Tuesday. At the open US stocks were broadly flat, maybe awaiting the next Trump tweet.

---