Last week drew to a close in a subdued manner following the Malaysian Airways disaster on Thursday afternoon and further news of Israel’s offensive in Gaza.
In the UK, the British Retail Consortium reported a surprisingly weak set of like-for-like sales numbers for June. That came ahead of the announcement that inflation had surprisingly increased to an annual rate of 1.9% in June. This news has added fuel to the fire in terms of when the Bank of England will move on interest rates. That said, the core inflation measure has been unusually volatile over the last four months, swinging 0.4 percentage points per month, so any conclusions should be made with caution. Expectations that a first rate hike could now come as early as the end of 2014 has lifted Sterling further.
On the company front, Sports Direct beat earnings estimates with a 15% increase in annual underlying operating profits. However, the stock sank into the red as the company said recent strong trading was offset by England's disappointing performance at the World Cup. Mike Ashley, the group’s controversial controlling shareholder was also in the news this week after he turned down his controversial inclusion in the group’s bonus plan for 3,000 of its permanent employees.
Takeover activity remains high with the US drug company AbbVie taking over Shire Pharmaceuticals in a deal that values the group at £32bn. Elsewhere, aircraft parts maker Meggitt was boosted by takeover speculation as was ITV and Trinity Mirror. Deal-making in the media sector is definitely picking up, with Twenty-First Century Fox making a play for Time Warner, which was rebuffed.
A number of large companies will be updating the market this week, however it is likely that geopolitical concerns will continue to occupy investors’ minds for a while longer yet.