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Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money.

Early Morning Call: anticipated actions of the BoE after the UK CPI surpasses expectations

UK consumer prices continue to put pressure on the Bank of England.

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UK consumer price index and the BoE

UK consumer prices continue to put pressure on the Bank of England (BoE). The headline consumer price index rose 8.7% in May year-over-year (YoY), higher than the 8.4% expected. This arrests the downward trend in headline UK inflation figures, which had been falling after a peak of 11.1% last year. The Office for National Statistics says that rising prices for "air travel, recreational, and cultural goods" helped keep inflation high. The core consumer price index (CPI) came in at 7.1% YoY, the highest since March 1992. The Bank of England is due to decide on its rates on Thursday.

Central banks

The Bank of Japan (BoJ) must ensure its policy "does not fall behind the curve." This was the comment of one of the nine board members when discussing the BoJ decision last April. BoJ policymakers agreed to keep ultra-low interest rates given ongoing uncertainties over the global economies, but it was noted that wages and inflation were already showing signs of accelerating.

Yesterday, the Swedish krona slumped to a record low against the euro on a combination of global risk aversion and expectations that the nation's central bank is close to wrapping up its year-long interest rate hiking cycle. Bloomberg says the jury is out among analysts on whether further losses are possible, with both RBC Capital Markets and Nomura International seeing the year ending around current levels.

Equities market

On the equity market, Berkeley Group posted a nearly 10% jump in its annual profit. The British high-end homebuilder reported a pre-tax profit of £604 million, compared with £551.5 million reported a year earlier. The homebuilder had forecast a pre-tax profit of about 600 million pounds.

FedEx

FedEx saw shares fall 2.5% in extended trade last night. It was among the businesses that benefited from the Covid lockdown, as consumers had to rely heavily on online shopping. Since then, the picture has been very different for the sector. Consumers have returned to stores, and now shippers are dealing with high costs as the global economic slowdown weighs on demand even further. To protect its margins, FedEx had no other option but to slash costs.

In the last fiscal year, FedEx slashed 29,000 jobs, retired 18 planes, and closed offices. It also reduced its Sunday deliveries. All this will cut $4 billion in permanent costs by the end of the 2025 financial year.

This had a mixed effect on earnings and sales. Earnings came in better than expected at $4.94 per share, but revenue was lower at $21.90 billion. In the new fiscal year, FedEx intends to carry on with cost-cutting and now plans to ground 29 more planes. The group forecasts flat to low-single-digit revenue growth versus the prior year. That would put the range of adjusted earnings, excluding items, at $16.50 to $18.50 per share, compared to analysts' estimates of $18.31.

Tesla

Tesla is joining the growing list of companies that wants to invest in India. Elon Musk met with Indian Prime Minister Narendra Modi Yesterday in New York. "I am confident that Tesla will be in India and will do so as soon as humanly possible," Musk said when asked by reporters about Tesla's plan to invest in India, adding he intended to visit the country next year.

"India has more promise than any large country in the world. He (Prime Minister Narendra Modi) really cares about India because he's pushing us to make significant investments in India, which is something we intend to do. We are just trying to figure out the right timing," Musk said.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

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