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MORGAN MCKINLEY LONDON EMPLOYMENT MONITOR: STRONG LONG-TERM GROWTH IN JOBS MARKET CONTINUES

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MORGAN MCKINLEY LONDON EMPLOYMENT MONITOR: STRONG LONG-TERM GROWTH IN JOBS MARKET CONTINUES

MORGAN MCKINLEY LONDON EMPLOYMENT MONITOR

London Employment Monitor August 2015 highlights:

  • Decrease of 5% in available jobs month-on-month
  • Year-on-year figures for available jobs showed a 30% increase
  • Jobs seekers decreased month-on-month by 4%
  • Year-on-year job seekers increased by 105%

Volatility returns

Chinese equities fell off a cliff in August causing markets across the globe to dip resulting in a spike in volatility, unseen since 2009.

“August was a testing month,” says Hakan Enver, Operations Director, Morgan McKinley Financial Services. “Next year’s edition of the Oxford Dictionary, should have ‘Financial Markets, August 2015’ as the new definition for the word ‘volatility.’”

Whilst the global equity sell-off did not have an immediate impact on the jobs market during August, normally the effects of any market turmoil are felt typically with a three to six month time lag. “If the market continues to stay in the red for the next few months, then we would expect it to show in hiring later on in the year. For now, it’s only a single month event,” continues Enver.

In the employment numbers, year-on-year growth remained strong with a 30% increase in available jobs and a 105% increase in those seeking new employment. “Overall, as the yearly numbers show, confidence remains positive for both employers and job seekers,” says Enver. “The massive increase in job seekers shows that people are confident they can improve their compensation packages. We’re also seeing banks recruiting for riskier projects, which indicates a need and an appetite for new talent from employers.”

Month-on-month, both professionals and job seekers showed a small decrease, 5% and 4% respectively. The monthly drop is due to seasonal factors – namely summer holidays. The same trend that was evident in July continued throughout August, with hiring managers choosing not to delegate their hiring to colleagues, but rather choosing to postpone the hiring process until their return. “We expect a bounce back in September as schools start up and people return to work again. Not to mention the number of interviews already pipelined for the first half of September that were pre booked from as early as the first week of August!” says Enver.

London top of European financial centres despite regulation fears

London is Europe’s number one financial centre according to research published byTheCityUK. During the first three months of 2015, The London Stock Exchange accounted for nearly a third of total funds raised in Europe. London also leads Europe in mergers and acquisitions, with the UK accounting for 41% of Europe’s total deal values.

Despite the strong showing for the City of London amongst Europe’s financial centres, banking leaders in the UK are voicing concerns about the march of regulation causing damage to the UK’s competitiveness. In a poll conducted by Interim Partners, nearly two thirds of finance executives said that new rules are negatively impacting the UK’s international standing as a financial centre.

Banks warn of threat to banking jobs

Strategists from Deutsche Bank warned in a morning note that the breakdown of China’s currency peg bears a resemblance to the events of 1998 that saw the collapse of currency pegs in Asia, Russia and Latin America, resulting in the losses of thousands of banking jobs across the globe.

The Times newspaper also reported that Barclays is planning to cut more than 30,000 of its staff within two years, as it considers accelerating a cost-cutting programme following the departure of Chief Executive Antony Jenkins.

Shanghai’s Black Monday wipes out this year’s gains in Europe

China’s sell off in August gripped the rest of world markets. Not even blue-chip stocks were safe as they lost over a trillion (pound sterling) in market value in a single day. The VIX index, a widely followed measure of market volatility often referred to as the “fear index”, shot to above 50, a number not seen since early 2009. “With such a prolonged period of low volatility behind us, August was a reminder to all market participants what volatility in action is really like,” says Enver.

The volatility rocked markets across the European continent, wiping out nearly all the gains made in 2015, resulting in the worst month for European equities in four years erasing over 5 trillion in pound sterling from European stocks.

“Chances that volatility stays high are probably higher than we would like them to be,” said Andreas Nigg, head of equity and commodity strategy at Vontobel Asset Management in Zurich. “The issues at hand, especially the slower growth in China, are still here. We may have seen the worst of the correction, but the bottoming out process after such high volatility usually tends to be bumpy.”

Economists in the UK remained calm despite the headline grabbing market sell-off. Whilst China has been a growing trade partner for the UK, it accounts for only 3% of all UK direct exports. The relative ease with which UK economists view the events of August can be explained with the positive macro figures that have been coming out of the UK throughout 2015.  This offers some comfort that the impact of this may not be as detrimental to the hiring market in London as some may assume.

Average salary increases

The average salary change continues to be in favour of the candidate, despite the slight fall in average compared to the previous month.  “A finance professional can still demand on average a minimum 17% salary increase based on August’s data, by moving from one job to another” says Enver.

Middle and Back Office Operations, Financial Services

Ian Filmer, Manager (Operations), Morgan McKinley Financial Services says, “As we approach the end of Q3, management begin to plan for the new year. We have seen the majority of hiring activity in the junior to mid level client services area. There have been stringent budgets for additional headcount, hence most employers have been forced to aim for a more affordable option but with a long term investment. In August, there was an influx of Client Reporting candidates looking for a new position across Asset Management, leading to an increase in vacancies as well. These roles ranged from £35,000 to £45,000.”

“Performance has consistently been a busy area throughout the year and shows no signs of slowing down. These vacancies have ranged from junior (£40,000) to senior analyst positions (£60,000 – £80,000). The roles have been frequent, however, that candidate pool is extremely limited. Those in Performance positions are well settled and don’t want to move unless the opportunity is too good to turn down. Vacancies have only come about due to candidates moving abroad for personal reasons or a move to Front Office has beckoned. Liability Driven Investment (LDI) is a growing market and specialist performance LDI roles have been common. This again is a limiting factor as LDI experience is rare.”

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Sterling rises above $1.37 for first time since 2018; UK inflation rises

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Sterling rises above $1.37 for first time since 2018; UK inflation rises 1

By Elizabeth Howcroft

LONDON (Reuters) – A combination of heightened risk appetite in global markets and UK-specific optimism lifted the pound on Wednesday, as it strengthened to its highest in nearly three years against the dollar and five-month highs against the euro.

The dollar weakened against major currencies for the third straight session, helped by U.S. Treasury Secretary nominee Janet Yellen’s urging lawmakers to “act big” on spending and worry about debt later.

The pound rose above $1.37, hitting $1.3720 — its highest since May 2018 — at 1045 GMT. By 1136 GMT it had eased some gains and changed hands at $1.3687, up 0.4% on the day and up 0.2% so far this year.

Versus the euro, the pound hit a five-month high of 88.38 pence per euro, before easing to 88.51 at 1137 GMT, up around 0.5% on the day.

The pound’s recent strengthening can be attributed in part to relief among investors that the impact of Brexit has not caused the chaos some feared, as well as a lessening of negative rates expectations, said Neil Jones, head of FX sales at Mizuho.

“Going into early 2021, there was a bearish sentiment building into the pound on the Brexit deal, in terms of maybe it had a limited reach, and then secondly an expectation of negative rates and so to some extent the market has been cutting down on sterling shorts because neither of those things have been quite so apparent as they were,” he said.

Bank of England Governor Andrew Bailey said last week that there were “lots of issues” with cutting interest rates below zero – a comment which caused sterling to jump.

The UK’s progress in rolling out vaccines is also seen as a positive for investors, Jones said.

Currently, the United Kingdom has vaccinated 4.27 million people with a first dose of the vaccine, among the best in the world per head of population.

“Further progress in vaccinations (a pick-up in the daily rate) by the time the BoE MPC meeting takes place on 4th February may prove enough to hold off on any additional monetary easing,” wrote Derek Halpenny, head of research for global markets at MUFG.

Inflation data for December showed that prices in the UK picked up by more than expected in December, to a 0.6% annual rate.0.6

Inflation has been below the Bank of England’s 2% target since mid-2019 and the COVID-19 pandemic pushed it close to zero as the economy tanked.

(Graphic: CFTC: https://fingfx.thomsonreuters.com/gfx/mkt/oakpeyayxpr/CFTC.png)

(Reporting by Elizabeth Howcroft, editing by Larry King)

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Euro sinks amid broader risk rally against dollar

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Euro sinks amid broader risk rally against dollar 2

By Ritvik Carvalho

LONDON (Reuters) – The euro struggled to join a broader risk rally against the dollar on Wednesday as analysts said the risk of extended lockdowns in Europe to combat the spread of COVID-19 and the continent’s lag in a vaccine rollout were weighing on the currency.

Down 0.1% against the dollar at $1.2117 by 1130 GMT, Europe’s shared currency had only the safe-haven Swiss franc and Sweden’s crown for company in resisting a broad rally against the greenback by the G-10 group of currencies.

“We’re getting more headlines that the current lockdowns will be extended further, which could mean that the euro zone would be flirting with a double-dip recession before long,” said Valentin Marinov, head of G10 FX research at Credit Agricole, noting Europe’s lag in rolling out a coronavirus vaccine compared to the United States and Britain.

“So all of that plays into the story that tomorrow’s ECB meeting, while uneventful in terms of policy announcements, could convey a relatively dovish message to the market. On top of that, President Lagarde could once again jawbone the euro, so the euro is kind of lagging behind.”

Marinov also noted price action in the pound, which hit $1.3720 – a 2-1/2-year high – and 88.38 pence – its highest since May 2020 against the euro – as a contributing factor to euro weakness. [GBP/]

There was also focus on a story by Bloomberg News, which reported the European Central Bank was conducting its bond purchases with specific yield spreads in mind, a strategy that would be reminiscent of yield curve control.

Elsewhere, the risk-sensitive Australian dollar gained 0.4% to $0.7727. The New Zealand dollar, also a commodity currency like the Aussie, gained 0.25% to $0.7133.

DOLLAR WEAKNESS

While the world will be watching Joe Biden’s inauguration as U.S. president at noon in Washington (1700 GMT), traders were more focused on his policies than the ceremony.

U.S. Treasury Secretary nominee Janet Yellen urged lawmakers at her confirmation hearing to “act big” on stimulus spending and said she believes in market-determined exchange rates, without expressing a view on the dollar’s direction.

The index that measures the dollar’s strength against a basket of peers was up almost 0.1% at 90.510. The euro forms nearly 60% of the dollar index by weight.

It also fell 0.1% against the Japanese yen to 103.81 yen per dollar.

While the dollar has perked up in recent weeks on the back of a rise in U.S. Treasury yields, investors still expect the currency to weaken.

“We remain bearish U.S. dollar, and expect the downtrend to resume as U.S. real yields top out,” said Ebrahim Rahbari, FX strategist at CitiFX.

“Continued Fed dovishness remains important for our view, in addition to global recovery, so we’ll watch upcoming Fed-speak closely.”

Positioning data shows investors are overwhelmingly short dollars as they figure that budget and current account deficits will weigh on the greenback.

(Graphic: Dollar positioning: https://fingfx.thomsonreuters.com/gfx/mkt/oakveyombvr/Pasted%20image%201611132945366.png)

UBS Global Wealth Management’s chief investment officer Mark Haefele reiterated a bearish view on the dollar, saying that pro-cyclical currencies such as the euro, commodity-producer currencies, and the pound would benefit “from a broadening economic recovery supported by vaccine rollouts”.

The cryptocurrency Bitcoin fell 4%, trading at $34,468.

(Reporting by Ritvik Carvalho; Editing by Angus MacSwan)

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England soccer star Rashford nets younger buyers for Burberry

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England soccer star Rashford nets younger buyers for Burberry 3

By Sarah Young

LONDON (Reuters) – Burberry stuck to its full-year goals on Wednesday after a media campaign fronted by high-profile English soccer star and social justice advocate Marcus Rashford drew a younger clientele to the British luxury brand.

Higher full-price sales would boost annual margins and Asian demand remained strong, Burberry said, while warning that it could suffer more sales disruption from COVID-19 lockdowns.

Manchester United striker Rashford, 23, has won plaudits for his campaign to help ensure that poorer children do not go hungry with schools closed during the pandemic.

A first coronavirus wave last year cut Burberry’s sales by as much as 45% before a bounce back on strong demand in mainland China and South Korea, which continued in the last few months.

Shares in Burberry were up 5% to 1,825 pence at 0905 GMT, with Citi analysts saying that improved sales quality from fewer markdowns would drive full-year consensus upgrades.

Burberry’s 9% sales decline in its third quarter was worse than the 6% fall in the second, and the company said that 15% of stores were currently closed and 36% operating with restrictions as a result of measures to curb COVID-19’s spread.

“We expect trading will remain susceptible to regional disruptions as we close the financial year,” Burberry said, adding that it was confident of rebounding when the pandemic eases given the brand’s resonance with customers.

In the third quarter, comparable store sales in Europe, the Middle East, India and Africa declined 37%, hit by shops shut in lockdowns and a lack of tourists visiting Europe, but in the same period, it posted sales growth of 11% in Asia Pacific.

Burberry said that Britain’s new relationship with the European Union would cause headwinds, warning of a modest increase in costs to comply with new rules and also the impact of an end to a scheme for VAT refunds for non-EU tourists.

This would make Britain a less attractive destination for luxury shopping when tourism returns after the pandemic, Burberry said, adding that it would try to mitigate the effect.

(Reporting by Sarah Young; Editing by Kate Holton, James Davey and Alexander Smith)

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