LONDON MARKET Closing Update 18 July 2017

Market Commentary
The U.K. 100 pared earlier losses after an unexpected slowdown in inflation was reported,
easing the pressure on the Bank of England to lift interest rates. Consumer Price Inflation (CPI)
dropped to 2.6% in June from 29% the month before, against economists expectation of no
change. Having been more than 40 points lower in early trading, the U.K. 100 closed down 13.9
points at 7,390.2 Royal Mail shares rose 3.1% after the company reported a 1% rise in
revenues in the three months to 25 June, helped by its Europe-wide parcels business GLS. US
markets continued to fall following US President Trump's healthcare bill failing to get
congressional approval again, casting further doubt on his ability to get any of his policies
through

Robert Barron, Chartered MCSI | Senior Stockbroker

Today's Closing Update

U.S. shares opened lower, weighed down by earnings reports from some big names and
concerns over President Donald Trump's ability to push through his pro-growth policies.

European and U.K. shares were swept lower Tuesday, under pressure as the euro stepped up
to a 14-month high against the U.S. dollar and as disappointing corporate earnings reports rolled
in.

The UK's inflation rate dropped unexpectedly to 2.6% in June, down from 2.9% in May, official
figures have shown. It is the first fall in the rate since October 2016 and was largely down to
lower petrol and diesel prices. Fuel prices fell for the fourth month in a row in June, according to
the Office for National Statistics. Economists say the fall in inflation could ease pressure on the
Bank of England to raise interest rates. The UK inflation rate has risen sharply since the
referendum on membership of the European Union last June, partly due to an increase in the
cost of imported goods following the fall in the value of the pound.

British Chancellor of the Exchequer Philip Hammond insisted that he is committed, like other
cabinet ministers, to leaving the EU single market and customs union after Brexit, amid rumours
of growing rifts in the ruling Conservative party. Hammond was pressed in parliament by a
Conservative lawmaker to say whether he was "absolutely, personally and enthusiastically
committed" to Prime Minister Theresa May's Brexit plan. "Yes, I've made it clear on many
occasions that when we leave the EU on March 29, 2019, we will also leave the single market
and the customs union," he said, following a cabinet meeting with May and other ministers earlier
Tuesday. "Those are matters of legal necessity," Hammond said. Officials quoted by the BBC
and other media said May had called for "strength and unity" from her cabinet, stressing the need
for confidentiality after apparent leaks in recent days.

Rupert Murdoch's 21st Century Fox has said it is confident the Culture Secretary will make her
decision on whether to refer its bid for Sky to the competition watchdog in the "coming days". Fox
said Karen Bradley should dismiss "flagrant political attempts to interfere" after a Government
spokesman last week reportedly said she would not make a decision until after the parliamentary
summer recess This would mean Fox would have to wait until at least next March to find out if its
11.70bn swoop for Sky can go through, if Bradley chooses to refer the deal to the Competition
and Markets Authority. But in a letter from its lawyers Allen & Overy, Fox hit out at "political
pressure" and took a swipe at former Labour leader Ed Miliband after he recently urged Ms
Bradley "not to do a grubby deal with the Murdochs". Bradley said at the end of June she was
"minded" to refer the deal to the CMA over concerns about diversity in the UK's media sector.
Miliband has since joined forces with other higher profile senior MPs including Vince Cable, the
Liberal Democrat leadership candidate, in a letter to the Government claiming Ofcom made
"fundamental failures" in its investigation and calling for a full CMA inquiry into the deal.

Bank of America posted stronger-than-expected quarterly figures, boosted by its consumer and
global banking units. Total revenues grew 7% to $22.8bn, with net interest income ahead by 9%
to $11.0bn, with the latter benefiting from higher interest rates and loan growth, the company
said in a statement. In parallel, net income increased 10% to $5.3bn, for earnings per share of 46
cents in comparison to 41 cents one year ago. Analysts had projected EPS of 43 cents on
$21.78bn of sales.
BofA chief Brian Moynihan highlighted the improvement seen in the lender's efficiency ratio,
which reached 60%, and its plans to return $17.0bn in capital over the next four quarters.

Bond trading revenues at Goldman Sachs slid 40% in the second quarter, echoing similar
declines at other US banks. Revenue from trading fixed income, commodities and currencies
was $1.16bn as the US increased interest rates and cut back on bond buying. Total net revenues
for the first half rose 12% to $15.91bn. Separately, rival Bank of America saw a boost to its
profits from tighter interest rate policy. Goldman posted profits of $1.83bn for the quarter, down
from the $2.2bn reported in the first three months of 2017 and only slightly higher than the
$1.82bn it reported for the same quarter last year.

Netflix shares surged on after the video streaming firm said it had about 104 million subscribers.
The US company said the better-than-expected number was a sign that investment in new
shows and movies was paying off. Netflix has produced shows such as 13 Reasons Why, about
teen suicide, political drama House of Cards and The Crown. Boss Reed Hastings said it was
"the rewards of doing great content". Netflix shares rose more than 10% in after-hours trading in
New York after announcing its second-quarter results. The firm said it added about 5.2 million
members during the quarter, mostly from overseas. International members now account for
about half of its subscriber total.

Growth in UK house prices has continued to slow, but the cost of the average home still
increased by 4.7% in the year to May 2017. Figures from the Office for National Statistics (ONS)
show a drop from the 5.3% rise in the year to April. The average UK house price stood at
221,000 in May, up 10,000 from the same month last year. The main contribution to the rise in
house prices came from England, where prices jumped by 5%. The average price of a house in
England is now 238,000, the ONS said, while a property in Wales costs 150,000 after a 3.8%
increase in prices over the past 12 months. House prices in Scotland rose 3.5% to 143,000,
while the average price of a Northern Ireland home stands at 124,000 after a 4.3% rise for the
year to May.

Oil prices rose as demand soaked up some of the surplus supplies from OPEC and the United
States, but traders said the market remained in a tight range and showed few signs of big short-
term moves

Gold climbed, with a sharply weaker U.S. dollar sending prices for the yellow metal up for a third
session in a row to their highest level of the month so far.

Market Close - 4:35pm

Market Index Change % Change

UK 100 7390.2 -13.9 -0.2%

UK 250 19,613.4 +92.8 +0.5%

GER 30 12,433.9 -153.3 -1.2%

FRA 40 5,179.4 -50.8 -1.0%

U.S. 30 21,540.95 -88.77 -0.4%

U.S. 500 2,456.9 -2.3 -0.1%

OIL (BRENT) 48.86 +0.44 +0.9%

GOLD 1,241.79 +7.68 +0.6%

UK Major Risers & Fallers - 4:35pm

Company Price Change % Change

IG Group 645.75 +91 +16.4%

G4S 341.1 +11.3 +3.4%

British Land 623 +19 +3.1%

Melrose Industries 233.05 -7.5 -3.1%

Company Price Change % Change

Experian 1532 -32 -2%

Barclays 205.05 -4 -1.9%

Reported Economic Data

Time/Date Previous Forecast Outcome

9:30am: U.K. CPI y/y 2.9% 2.9% 2.6%

9:30am: U.K. RPI y/y 3.7% 3.6% 3.5%

9:30am: U.K. PPI Input m/m -1.3% -0.8% -0.4%

2:30pm: U.K. BOE Gov Carney Speaks - - -

Interbank Spot FX Rates - 4:35pm

Pairing Rate % Change

GBP/USD 1.3027 -0.21%

EUR/USD 1.1573 +0.83%

GBP/EUR 1.1256 -1.03%

USD/JPY 111.9300 -0.62%

USD/CHF 0.9540 -0.89%

GBP/JPY 145.7960 -0.85%