A daily summary and commentary of events and factors that affect the global markets, with a particular emphasis on the foreign exchange markets.
Springtime Blues in the U.K.
Share this story:
David Atkinson Foreign Exchange Sales Manager
The spotlight of the global economy is shining on the U.K. this morning. The U.K. is one of the few countries that publish GDP on a monthly basis instead of quarterly. Presumably an argument can be made that too frequent of publications can scare a population when the larger picture isn’t so dire, but when we have piled on so much bad news already, what is one more number?
The U.K.’s GDP for April came in at a -20.4% decline, or plunge if we want to be accurate about it. This comes after a -5.8% drop in March. But like all economic statistics these days, we have become numb to the fact that the figures are bad. It is just a question of how bad. The FTSE 100 mirrored what we saw in U.S. equities, having fallen by 33% from its high to claw back about 20% of the loss. The index is up just over 1% so far today in line with a positive opening to U.S. stocks.
British pound sterling looks like a “V” on the charts. We were trading at just over 1.31 USD per pound on March 9 and then just 10 days later hit a low around 1.15 before recovering to near the 1.25 level in just another 10 days. Keep in mind that on top of a pandemic, economic carnage and civil unrest, the U.K. is also dealing with Brexit, which would be the main story for sterling if it were not for the other issues affecting the U.K along with everyone else.
Of course, these eye-popping numbers will have some corollaries the other way at some point. Friday’s U.S. non-farm payrolls were a record increase, but as you can imagine, the context is one where everyone knows it comes after horrible drops in employment. Everyone is now focused on how we move forward as confirmation of the last three months of economic shocks.
Data wise, we saw import prices rise 1.0% for May – that is a little above expectations, but excluding petroleum, that number came in at just 0.1% Oil has been on a rebound after that crazy May contract price action, although West Texas Intermediate did drop 8.2% yesterday along with the stock market rout.
Bloomberg Economics published an interesting statistic that 30% of current job losses are expected to be permanent. We all know that most of the currently unemployed will return with economic activity, but what has been emphasized repeatedly is that the entire global economy will be restructured after this, and how that pans out will be interesting to see. Have a great weekend everyone!
Want to learn more about international finance, economics, and global events? Sign up for our other Foreign Exchange emails and videos!
Follow City National Bank on social media:
Non-deposit investment products:
Are not FDIC insured,
Are not deposits or other obligations of City National Bank and are not guaranteed by City National Bank, and
Are subject to investment risks, including possible loss of the principal invested.
This report is for general information and education only and was compiled from data and sources believed to be reliable. City National Bank does not warrant that it is accurate or complete. Opinions expressed and estimates or projections given are those of the authors as of the date of the report with no obligation to update or notify of inaccuracy or change. This report is not a recommendation or an offer or solicitation to buy or sell any financial instrument discussed. It is not specific investment advice. Financial instruments discussed may not be suitable for the reader. Readers must make independent investment decisions based on their own investment objectives and financial situations. Prices and financial instruments discussed are subject to change without notice. Instruments denominated in a foreign currency are subject to exchange rate and other risks. City National Bank (and its clients or associated persons) may engage in transactions inconsistent with this report and may buy from or sell to clients or others the financial instruments discussed on a principal basis. Past performance is not an indication of future results. This report may not be reproduced, distributed or further published by any person without the written consent of City National Bank. Please cite source when quoting.
Now accepting scholarship apps Celebrating 40 years of service -- A loan to an innovative company -- Affording your dream home -- Mergers and a new branch in Raleigh View this email in your browser Forward to a friend
Here's what this indicator is saying about US stocks right now. ACTIVE INVESTOR WEEKLY EDITION: January 21, 2022 View in a browser FIDELITY VIEWPOINTS ® WEEKLY EDITION: January 21, 2022 Bollinger band stock signal Here's what this indicator is saying about US stocks right now. Read more CHART OF THE WEEK Inflation and corporate consolidation US industries have become