UK stock markets have begun the week on the back foot with the FTSE 100 lower by 60 points at the time of writing. After rising on Friday some of these gains have subsequently been handed back as attention turns to a busy week ahead with UK inflation, retail sales and employment data, Chinese GDP and the third and final US Presidential debate all potential catalysts to drive flows in the coming sessions.The pound is unchanged against the US dollar but showing some small losses against the Euro and Japanese Yen.
Pearson (LON:PSON) shares tumble
The worst performing stock on the UK blue chip index today is Pearson, with shares dropping by almost 10% in early trade after the education publisher reported a worse-than-expected fall in sales. A decline of 7% in underlying sales for the first three quarters of the year has obviously spooked investors and seen many rush for the exit, despite analysts predicting a 5% drop. Elsewhere Barratt Developments (LON:BDEV), Royal Mail (LON:RMG) and Standard Life (LON:SL) are also in the red and contributing to the broader declines in the benchmark. The risers number is only five at the time of writing, with Glencore (LON:GLEN) leading the way and up by approximately 1.50%.
UK data to throw the pound a lifeline?
After ending last week at yet another low against the US dollar the pound remains under intense pressure. Positioning in the currency remains near record lows, but perhaps tellingly the net short position didn’t increase last week. With inflation figures out tomorrow before the latest employment and retail sales figures in the days following, there’s plenty on the data front to provide further insight into the strength of the UK economy post-Brexit vote. With Tuesday’s CPI expected to show a sizeable uptick in inflation and the currency exhibiting fairly extreme oversold conditions by some technical measures, there is the potential for a short covering rally after the large declines seen in sterling in recent weeks. However, if we do get a bounce in the coming days, this will likely only serve raise the question as to whether it is of the dead-cat variety or the start of a sustained recovery. On the other hand, if the data takes a turn for the worse then there’s a very real possibility we see further downside and more record lows.