Greg Secker – U.K. Market update brought to you by Traders University

UK Report

The FTSE 100 was 26.58 points higher closing at 5,620.43.

Adam Cole of RBC Capital Markets has stated that he believes, politics have had a large influence on the pound in recent weeks. After plotting data, there is a clear trend the declining Tory lead is almost perfectly correlated with the weakening pound. It seems that traders are scared of a hung parliament and a weak government that could continue. Property developers and investment managers have warned that the threat of a double dip recession for the UK is real and would therefore force banks to sell property portfolios. Delegates at MIPIM, have stated that the UK’s survival during the recession has relied heavily on government aid and that a spending cut could expose the underlying weaknesses of the property market.

Due for release today is the GBP Claimant Count Change and GBP MPC Meetings.

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UK Report

The FTSE 100 dropped 31.80 down points to close at 5,593.85, having risen 0.5 percent last week.

This week Gordon Brown will be ordered to up his game from the European Commission, the European commission is concerned the UK is not doing enough to cut its budget deficit. Under Labour’s current proposals, by 2014-15 it is expected to drop the deficit to 4.7% of the GDP. Yesterday, Seymour Pierce said that UK banks are likely to see more revenue disappointment before rebuilding their profitability. The brokerage stated that on average it was 10% below the consensus revenue expectations for 2012 for the sector.

Due for release today is the EUR German ZEW Economic Sentiment, USD Building Permits, USD FOMC Statement and USD Federal Funds Rate.

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UK Report

The FTSE 100 closed 8.39 points higher at 5,625.65, after it closed lower on Thursday.

Alistair Darling has revealed that next week’s Budget will not include new spending cuts, however he did not rule out tax rises. Darling said the new package on 24th March will focus on measures that are aimed to encourage economic growth. Darling is expected to use money gained from lower-than-expected unemployment data to fund paying off part of the deficit, which is due to hit £178bn. The BOE has admitted that its QE programme and loose monetary policy contributed to the 2009 equity boom. Between March and December 2009, shares rallied strongly after £198bn was pumped into the financial system through gilt repurchasing.

Due for release today is the USD TIC Long-Term Purchases and the AUD Monetary Policy Meeting Minutes.

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The FTSE 100 closed down 0.4%, to finish at 5,617.26.

According to the Global Financial Centres report, London is no longer the world’s leading financial centre. This is the first time London has been knocked off its top spot. Only 4 Cities dropped points, London fell by 14 to tie with New York on 775. London’s fall was fuelled by fears of a regulatory backlash and recent tax hikes, such as the 50p rate of income tax, the 0.5% increase in national insurance and also Alistair Darlings one-off banking bonus tax. Yesterday, Sterling managed to claw back some of Wednesday’s sharp losses after BOE data showed that consumer expectations for inflation during the next year will inch higher. The Bank of England/GfK NOP Inflation Attitudes Survey showed that, on average Britons are expecting inflation to be around 2.5 per cent in the next year.

Due for release today is the CAD Unemployment Change, CAD Employment Change, USD Core Retail Sales m/m and the USD Prelim UoM Consumer Sentiment.

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UK Report

The FTSE 100 was 38.27 points higher closing at 5,640.57.

According to the Independent, the City watchdog has raised concerns about the prospect of a meltdown in commercial property. The FSA announced much tougher stress tests for banks, after raising concerns that they are not setting aside enough to cover losses on the sector. Britain’s banks will be ordered to disclose more details of their highest earners’ pay. Lord Myners, the Financial Services Secretary, has tabled draft plans which would require the lenders to detail the numbers of staff who earn more than £500,000.

Due for release is the CHF Libor Rate, CHF SNB Monetary Policy Assessment, CAD Trade Balance, USD Trade Balance, USD Unemployment Claims and NZD Retail Sales m/m.

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