Markets up on US-China trade talks; shop prices rise
Prices in the shops have risen (pic: Terry Murden)
Asian shares rose to seven-month highs today as investors were buoyed by signs of progress in the US-China trade talks and positive economic data. Oil approached $70 per barrel.
Japan was up 0.5% early this morning, after earlier touching its highest level since late August. The Shanghai Composite put on 1.2% at the close and Hong Kong Hang Seng index also advanced 1.2%.
The pound was about 0.1% higher at $1.3139, having recovered its footing after Prime Minister Theresa May said she would seek another delay to Brexit to work out an European Union divorce deal with opposition Labour leader Jeremy Corbyn.
asper Lawler, head of research at London Capital Group said: “China’s service PMI picked up to a 14-month high in March as both domestic and international demand improved. This is yet further evidence that stimulus policies by the Chinese government are starting to take affect and that fundamentals are showing signs of improvement.
“It will take more than one month’s worth of data to see whether the Chinese economy has turned a corner and is starting to stabilise. However, investors are starting to get optimistic that a recovery is setting in.”
Spread-betting firm IG expected the FTSE 100 to open around 7 points higher after closing up 74 points on Tuesday at 7,391.
Shop prices higher
Shop and food price inflation in March was at its highest since 2013 as cost pressures take their toll on retailers.
Shop price inflation edged up to 0.9% during March, versus 0.7% in February, marking the highest rate since March 2013, according to the BRC-Nielsen Shop Price Index.
Non-food items stayed at the same level as the previous year. However, food price inflation accelerated to 2.5% in the month, up from 1.6% in February. It was the highest food inflation rate for more than five years.
Fresh food price inflation rose from 1.7% in February to 1.9% last month.
David Lonsdale, director of the Scottish Retail Consortium, said: “Retailers are working hard to keep down shop prices, however cost pressures in the supply chain have built up and are being compounded by increases in government-imposed taxes.
“These pressures are now outweighing the impact of strong competition between shopkeepers, who have little margin to work with, and who are regrettably being forced to pass on some of these costs to consumers.
“The fact that food prices have spiked will be most keenly felt by lower income households who typically spend proportionally more of their family budget on groceries.”
Asda leapfrogged its takeover suitor Sainsbury to become the UK’s No. 2 supermarket group by market share for the first time in four years, according to data from Kantar.
Sainsbury’s sales fell 1.8% over the 12 weeks to March 24, reducing its market share to 15.3% from 15.8% in the same period last year..
That meant Asda, the British arm of US retailer Walmart, overtook Sainsbury with a market share of 15.4% as its sales edged up 0.1%, though Sainsbury remained the biggest seller of food and drink of the two.