The FTSE 100 Surges to Fresh HIghs as Sterling Continues to Fall
The UK's FTSE 100[i] hit another fresh record high as sterling continued to drop, even though November data showing a blowout in the trade deficit was the catalyst for the currency's latest downward leg. As has been highlighted many times, the FTSE 100 is filled with foreign-currency earning multinationals, whose sterling profits are buoyed by weakness in the domestic currency. This means as the pound falls they make more money. The FTSE 250 and other UK stock indices have not performed as well as the multinational index, the former showing a 0.2% decline, remaining below record highs, relative to the FTSE 100's 0.2% gain. Sterling traded below 1.2100 for the first time since October in the wake of the UK trade data, which showed an unexpected GBP 2.6 billion spike in the deficit in November, which reached GBP 4.2 billion.
UK Production Figures Beat Expectations
UK production figures for November beat expectations, with the headline industrial output reading rising 2.1% month over month and 2.0% year over year, up from -1.1% month over month and -0.9% year over year in revised data for October and the first positive readings in three months. The median forecasts had been for growth of just 0.6% month over month and 0.3% year over year. The reopening of the Buzzard oil field in the North Sea following a down period for maintenance boosted the industrial figure, though the narrower manufacturing production gauge, which excludes mining and quarrying, forestry and agriculture, also smashed forecasts. Manufacturing output came in with growth of 1.3% month over month and 1.2% year over year, up from -1.0% month over month and -0.5% year over year in October.
Oil prices[i]have found a footing after the near 6% tumble of Monday and Tuesday. WTI is up 0.7% presently, at $51.15, putting in some distance from yesterday's four-week low at $50.71. Further customer notifications from Saudi warning of reduced supply in the month ahead, have given the crude market an underpinning today.
On the flip side the API (American Petroleum Institute) revealed on Tuesday evening a larger than expected build in crude oil inventory. The private agency report that crude oil inventories increased by 1.5 million-barrels in the latest week compared to expectations of a 1-million-barrel increase. Gasoline inventories increased by 1.7 million-barrels and distillates which include heating oil, saw inventories increase by 5.5 million barrels.
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