Wednesday, 25th October: A late flurry of activity towards the end of Wednesday sent the FTSE 100 down more than 1%, its biggest daily movement since mid-September. Before we get on to that, let’s rewind 7 hours when the latest UK GDP figures came ahead of expectations at growth of 0.4% in the 3 months to September. 2017’s first 2 quarters demonstrated growth of 0.3%. The Monetary Policy Committee (MPC) are expected to announce a rate rise on 2nd November. There currently stands an 84% probability of a rate rise. of which it would be the first time the MPC have raised rates since July 2005.
The positive macro news sent the pound higher, although we can’t quite correlate this to indices falling the UK quite so. The pound rose c.1% over the course of the day against the US dollar to $1.3256 at the time of writing, although the rise against the € was slightly more muted, +0.58% @ €1.123.
Over in China this morning, the new Politburo Standing Committee (PSC) was revealed. It looks like there is no clear successor to President Xi Jinping, with no new members aged in their mid-50’s, who have previously been seen as potential successors to the existing president. Only the current present and Premier Li Keqiang have kept their seats, with the 7 strong committee having ultimate control over the world’s second largest economy.
Indices in London closed Wednesday in the red, the main index dragged lower by 1.05% following a late announcement by GlaxoSmithKline. The pharmaceutical giant has said it would consider a bid for Pfizer’s consumer-health business. Slight issue, although Pfizer have previously said it was potentially looking at the sale or spin-off of its consumer health business, the business isn’t actually up for sale. Analysts have said the division could fetch more than $10bn, with other pharmaceutical companies and consumer goods companies looking to be interested as well. At midday Glaxo had posted higher third-quarter earnings and revenue, although a lack of strategy plans by the group’s new Chief Executive caused some uncertainty from investors. The shares eventually closed -5.52%.