CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 73% of retail investor accounts lose money when trading CFDs with this provider (Saxo Bank). You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

May 2018 Newsletter

Themes from May

Marks & Spencer reported adjusted pre-tax profits of £580.9m down 5.4% for FY18 and held its dividend at 18.7p per share. The company reduced net debt to £1.82bn from £1.93bn.

PM Theresa May struggled to secure the agreement of her cabinet to a UK/ EU “customs partnership” which would avoid the need for paperwork at UK/EU borders.

UK Sports Minister Tracey Crouch said the UK will require betting shops to cut the maximum stake on fixed odds betting terminals (FOBT) to £2 from the current £100 level.

Ocado agreed to share its Ocado Smart Platform technology with US retail giant Kroger. Kroger is also subscribing for a 5% stake in Ocado paying £183m or 552p per share.

UK Department of Transport took back control of the InterCity East Coast line from Virgin Trains East Coach (90% owned by Stagecoach).

Netflix overtook Walt Disney in market value becoming the world’s most valuable media company despite revenues less than a third of Disney’s $55.1bn.

Barclays reportedly has instigated early stage merger talks with Standard Chartered. The unconfirmed rumours have hit Barclays shares with investors concerned at the risk of another Barclays rights issue to fund an acquisition.

Forthcoming UK Events

1 June Markit/ CIPS Manufacturing PMI
4 June Construction PMI
5 June New Car Sales / Retail Sales
6 June 5YR Gilt Auction
7 June Halifax House Price Index
12 June UK Balance of Trade / Average Earnings/ Claimant Count Change
13 June PPI Input Prices/ Retail Prices Index/ Core output
14 June UK Retail Sales
20 June 10 YR Treasury Gilt Auction
21 June Bank of England Interest Rate Decision

Performance of World Markets (31/5/2018)

North America Value Change +/-(1M)% +/-(1YR)%
DOW JONES (Close) 24,415.84 252.69 1.04 15.47
S&P 500 (Close) 2,705.27 57.22 2.16 11.04
NASDAQ (Close) 7422.12 374.85 5.30 19.13
Europe/UK Value Change +/-(1M)% +/-(1YR)%
UK 100 INDEX (Close) 7,678.20 157.84 2.09 1.77
CAC 40 INDEX (Close) 5,398.40 -130.82 -2.36 1.49
EUROSTOXX 50 (Close) 3,406.65 -147.14 -4.14 -4.49
Asia/Far East Value Change +/-(1M)% +/-(1YR)%
SHANGHAI COMPOSITE (Close) 3,095.47 13.24 0.43 -0.23
NIKKEI-225 (Close) 22,201.82 -266.05 -1.19 11.79
ASX 200 (Close) 6,011.90 29.20 0.48 4.77
HANG SENG (Close) 30,468.56 -339.89 -1.10 18.05

United Kingdom

May was positive for UK blue chips helped by the decision of the Monetary Policy Committee to further delay a hike in base rates. Over April investors were convinced May would see the MPC hike to 0.75%. The constant flip flop on base rates sent sterling weaker, along with sputtering UK GDP growth, variously attributed to the weather, was sufficient to ensure the April sterling rally was reversed. The Bank of England has suffered a loss of credibility over this episode.


The UK government is struggling to arrive at a solution to the UK/ EU customs problem, as it tries to square “frictionless” trade with its insistence on leaving the EU customs union, which would require checks and tax collection. This thorny issue has run and run since the Brexit vote. Could it result in a challenge to the PM? In our view a challenge could come after the summer recess, Parliament returns on the 4th September.

Phoenix Group announced a rights issue of 7 new shares for every 15 held at 518p to fund the purchase of assets from Standard Life.


China’s move to cut tariffs on 1,449 categories of imported goods on 31 May was aimed at addressing the $375bn in the China trade surplus with the USA. The US buys almost four times as much from China as it sells. However the tariffs cut were also seen as small in the context of their covering 1.1% of China’s $1.95 trillion in annual imports.

The muted movement in Shanghai and Hong Kong equities suggests investor concerns over the disruptive impact of a trade war have for now, abated. The IMF estimates China will grow at 6.6% in 2018 but warned over excessive credit growth.

Japan which saw GDP slowdown during Q1 is forecast to grow by about 1.2% over 2018 however this may be revised lower due to the higher oil price and its historically braking effect on Japan. Inflation remains below the Bank of Japan’s 2% target.

Shinzo Abe, PM of Japan has warned Tokyo cannot accept new US tariffs on imported automobiles and autoparts that are reportedly being considered by President Trump. This followed a move by Trump last week to launch an investigation into “whether auto imports posed a national security risk” a justification that might be used to raise the duty from 2.5% to 25%.


The Five Star Movement, founded by comedian Beppe Grillo in 2009, secured 32% of the vote in the election with their partners, the League holding 18%. The problem is their populist manifesto pledges to end austerity, introduce new welfare spending and tax cuts do not square with Italy’s 132% debt/ GDP. Both parties also have an anti –EU agenda promising tougher migration policies at odds with EU freedom of movement. Italy as an EU founder member is not thought to desire a departure from the EU, but it clearly is having a re-think about its rules.

How does this obvious impasse resolve itself? Italian bond yields have spiked upwards as investors question the new government’s willingness to service its debts. The 10 year bond yield remains far below the 7% level reached in 2011. This seems to reflect investor faith in the ECB and the fact Italy may be “too big to fail”.

United States

US bond yields had been moving sharply higher, got a respite from the Italy. The benchmark 10 year bond declined 15 basis points to 2.77%, its biggest one day fall since the Brexit vote in June 2016. However on balance there remains a 70% chance the US Federal Reserve will lift the Federal Funds rate at its June meeting.

Should Fed’s published rate trajectory remain in place that would suggest two further hikes in 2018, in June and December. The fiscal outlook $1.5trn in tax cuts and $300bn in increased government spending suggests sharply higher government debt and higher market interest rates.

Subscribe to our Award-winning Newsletter

We provide daily market data in the form of our award-winning newsletter, The Morning Call and The Market Close.
You can subscribe to this information at any time to help you make the most of your investment.

Quick Sign-up

Get Started with CSS

Open an Account

Subscribe to our award winning daily newsletter

Voted "Best Market Newsletter" in 2012, 2014, 2015 and 2017 by the City of London Wealth Management Awards

Subscribe to our newsletter (Popup)

By signing up to our free email, you are consenting to receive these promotions. The newsletter is sent up to three times per day during the week and up to once per day over the weekend and is directed at UK residents. The newsletter contains company news, market movements, CSS research and promotions and breaking economic news. Occasionally our newsletter will contain advertisements from trusted partners. However, we will never give, sell or rent your email address to any other companies. If you want to stop receiving our free emails you can unsubscribe at any time by clicking on the link at the bottom of each email. You can read our privacy policy here.

No, thank you I am already subscribed