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London Finance Show: Risk on after record S&P close, but not for Footsie

With a record close on the S&P 500 index in New York last night, and the United Nations unanimously backing further sanctions on rogue state North Korea, risk is back on and  Matt Brown, market commentator @MatthewBrown UK thinks it is “onwards and upwards” for markets.

He notes that North Korea exports coal, lead, and seafood – adding “would you want to buy seafood from North Korea with all the possible nuclear activity” - but points out that the UN action has served to “settle the market” in the US and Asia.

But, in the UK, inflation numbers beat forecasts putting pressure on the FTSE 100, and with the Bank of England meeting looming on Thursday Brown thinks there may be some more “hawkish” votes on interest rates, although the bank was probably aware of the data points already.

The commentator said, aside from the CPI and PPI numbers impressing, official house prices rose by 5%, and other data showed job vacancies in the City in August up by a third, meaning recent data points are strong and the UK looks positive, leading the pound to rally strongly on the back of it.

Brown pointed out that sterling has broken the technical levels with a big figure move to nearly US$1.3250, and could pushed higher again, with FX traders seeing the pound as the currency of the week given the BoE and data.

On the corporate front, Brown mentioned equipment hire firm Ashtead Group PLC (LON:AHT) which he says will benefit from the re-building needed in the US in the wake of the impacts of Hurricane Irma and Harvey.

He also assesses Citigroup’s double-downgrade of hotels to coffee Whitbread plc (LON:WTB) today, pointing out that it’s the Air BnB trade which is having an impact.

But despite the positive market comment, Brown also notes that Bill Blane of Mint Partners has tagged October 12 – the Thursday before Friday 13th – as the day the market will sell-off.

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