Pound Declines as Bright Start to the Week Fades Away: City Latest - BLOOMBERG
JANUARY 23, 2023
BY , Bloomberg News
(Bloomberg) -- Thanks for tuning in to City Latest. We’ll wrap it up for the day, and we’ll be back tomorrow for more coverage of news and analysis vital to UK markets. Have a good evening.
UK Assets Head for Close on Mixed Day (3:55 p.m.)
We’re heading for the close now and the theme of a weaker pound and stronger stocks is continuing.
But, with markets largely drifting, the subject of today’s Spotlight Move is a far longer-term shift in prices — namely those that make up the total net worth of the UK. The ONS said today that figure jumped by £1 trillion between 2020 and 2021 to £11.8 trillion. Land accounted for 60% of the jump, as households benefited from a pandemic house price surge.
UK Asks Consumers to Tone Done Energy Use (3:21 p.m.)
The UK grid will ask some households to cut energy use on both Monday and Tuesday — as a plunge in wind power and freezing temperatures across the country test its ability to keep the lights on.Rachel Morison write that, starting 5 p.m., customers of Centrica, EON and Octopus who have signed up for the program will be asked not to use dishwashers or washing machines during a two-hour period of peak demand. Those who comply will be paid for their abstinence.
Read More: UK Asks Consumers to Turn Down Power as London Freezes
Pound Extends Decline (2:17 p.m.)
Time for a quick check-in with markets now, and the pound has extended its declines throughout the early afternoon, with the currency now poised for its biggest drop since January 5.
The FTSE 100 has also given up some of its gains, although it is just about hanging in the green for now.
Sunak's Taxing Monday (1:30 p.m.)
Three of Sunak’s ministers now face probes after the Prime Minister announced an investigation into Nadhim Zahawi’s tax affairs.
Bloomberg’s UK government reporter Alex Wickham joins the UK politics podcast today to tell hosts Caroline Hepker and Yuan Potts why this kind of announcement is a clear strategy by Downing Street to dampen scrutiny.
Money Distilled: Which Assets Should I Own? (12:05 p.m.)
In today’s Money Distilled I take a look at what you can think of as the "primary colours" of asset allocation.
If you're just starting out as an investor, the idea of putting together a sensible portfolio can be intimidating. A glance through the newspapers will see experts talking about diversified portfolios that contain everything from private equity to forestry to "alernatives" and hedge funds.
But ignore this sort of jargon-laden chatter. Portfolio construction doesn't have to be complicated. In fact, there are only four key asset classes you need to consider. Read more here. — John Stepek
Europe Real Estate’s Reckoning (12:14 p.m.)
For your lunchtime long read, check out Jack Sidders’s story on how a reality check is about to hit Europe's real estate market as lenders get the results of year-end appraisals.
Loans, bonds and other debt totaling about €1.9 trillion — nearly the size of the Italian economy — are secured against commercial property or extended to landlords in Europe and the UK, according to the European Banking Authority, a survey by Bayes Business School and data compiled by Bloomberg. Roughly 20% of that, or about €390 billion, will mature this year, and the looming crunch marks the first real test of regulations designed after the global financial crisis to contain real estate lending risks.
As Skardon Baker, a partner at private equity firm Apollo Global Management, noted:
“Europe is going to go through the great unwind of 10 years of easy money. The amount of distress and dislocation is off the spectrum.”
Read more: Europe Is Bracing for a Sharp, Abrupt Real Estate Reversal
Pound’s Good Morning Comes to an End (11:29 a.m.)
The pound’s good start to the week has come to an abrupt end, with the currency falling well below $1.24 and seeing even bigger losses against the euro.
Gilts have also lost their early gains, while stocks are the lone bright spot, with the FTSE 100 around the highs of the day.
European Earnings Season Picks Up Pace (11:07 a.m.)
We're getting towards the business end of earnings season in Europe now. Here's Bloomberg's Charles Capel with a guide on what you should be watching out for this week.
City of London Workers Pause Job Hunt (10:37 a.m.)
Finance workers in the City of London are putting their job hunts on hold and instead opting to wait for their bonuses to figure out their next move.
That’s according to Morgan McKinley’s Autumn London Employment Monitor, which found a 23% drop in job seekers for finance jobs in the last three months of 2022. Hakan Enver, managing director of Morgan McKinley UK, noted:
“As expected over the quarter, there has been a slowdown in those looking for work. Professionals have become more cautious and are waiting for bonuses before considering a move.”
Professionals have been looking for new jobs with higher salaries and a better work-life balance, and the study found that there was a 21% average salary change moving from one job to another in the fourth quarter.
Read more: Cautious London Finance Staff Pause Job Hunt Until Bonuses Paid
Cold Snap Forces Brits Back to Work (9:29 a.m.)
While the UK's coal plans haven't been activated, the cold weather may be having other economic consequences.
As Prejula Prem writes, freezing temperatures across the UK in recent days have about one-fifth of Brits to change their working patterns and head back to the office, according to a survey by the independent job board CV-Library.
With energy bills at record highs, almost three in five of the respondents who felt compelled to go to office did so in order to save on household heating and electricity. The remaining 44% said they were seeking social interactions after being isolated due to the cold snap.
Read More: Freezing Weather Sends Some UK Workers Back to the Office
London Rush: Sunak's Problems Mount Up (9:04 a.m.)
For more on today's biggest stories, including the latest political problems facing Rishi Sunak, check out today's London Rush below, or read the newsletter here.
UK Grid Stands Down Reserve Coal Units (8:54 a.m.)
This just in: the National Grid called off its request for three coal-fired units to get ready to generate to help ease a power squeeze on Monday evening.
That comes as the grid looks set to use the emergency measure of asking some UK households to cut energy use during a two-hour period of peak demand. Energy prices for peak times are the highest since Dec. 21 as sub-zero temperatures in London cause demand to spike.
Read more: UK Asks Consumers to Turn Down Power as London Freezes
London Real Wages Hold Up Better Against Inflation (8:38 a.m.)
While inflation-adjusted pay is falling widely in the UK, London workers are feeling less pain than most.
Residents of the capital saw their real wages adjusted for inflation slip by £9 a week compared to a year ago during the fourth quarter of 2022, research from the Centre for Economics and Business Research indicates. That compares with an average slide of £19 a week in the UK. This comes as Brits grapple with a record decline in living standards:
Karl Thompson, an economist at CEBR, noted:
“Though there are several factors at play, lower real earnings imply lower living standards and therefore often fewer resources available to lead a healthy lifestyle.”
Read more: Londoners Escape Worst of Inflation Crisis With Big Pay Hikes
UK Assets All Push Higher (8:11 a.m.)
UK trading is underway now and the pound has bounced a little bit, to move solidly above $1.24.
Stocks and gilts are also grinding out gains, led by retailers such as Ocado, and Primark's parent ABF. The latter reports earnings tomorrow.
UK Real Wages, China Holiday in Focus (7:55 a.m.)
Focus in the UK today turns to a report on real wages, ambulance strikes and the power squeeze amid freezing temperatures.
Globally, the spotlight will be on China, which saw Covid-related its Covid-related death toll topped more than 12,600 in the week before the Lunar New Year holiday.
Check out more top reads from today’s Five Things newsletter:
- Ken Griffin’s Citadel churned out a record $16 billion in profit for clients last year
- Hedge fund Elliott Investment Management has taken a substantial activist stake in Salesforce
- European businesses need to unleash investments to keep up with US, China peers, Germany and France warned
Pound Starts Week Near $1.24 (7:30 a.m.)
The pound has enjoyed a good start to the week, and is currently trading close to $1.24. It hit the highest level since June in overnight trading.
With global stocks also trading in the green, the FTSE 100 may be eyeing up gains too, potentially setting up a fresh run at the record high that eluded it last week.
Good Morning (7:25 a.m.)
Good morning and welcome to today’s edition of City Latest. Stick with us as we bring you all the news and analysis vital to UK markets in just a moment.