Following the FOMC’s narrative yesterday that it would begin shrinking its balance sheet from September in a move that is likely to help the dollar, the news helped the pound to surge above $1.315 against the Dollar for the first time since September last year as investors focused on the central bank’s comments about weak inflation.
Spreadex Analyst, Connor Campbell noted “This led to a muted start from the FTSE, though the weight of the pound’s gains is being somewhat negated by a largely positive morning for the index’s reporting companies.”
Accendo Markets Analyst, Mike van Dulken added “FTSE corporate news this morning included Anglo American resuming dividend payments earlier than expected while St James’ Place raised its payments by 25%. Royal Dutch Shell profits have surged on higher oil prices, while AstraZeneca reported good results but also a cancer drug set-back. Glencore Copper production fell in H1.”
“Housebuilders may react to Foxtons’ warning of a challenging outlook and Countrywide’s profit collapse. Intu Properties has cut forecasts amid retail weakness that has seen sector shares fall markedly, but property hold up remarkably well.” he added.
US equity markets closed at record highs again yesterday as a result of FOMC comments. The Fed’s less hawkish than expected policy statement and impressive company earnings has buoyed market sentiment.
Mike van Dulken noted “The Dow Jones outperformed as Boeing rallied almost 10% on impressive Q2 numbers, offsetting the combined losses of all 16 falling stocks.”
“The Nasdaq also rallied, notching a second straight record high, while the S&P500 closed just above break even after Telecom strength offset Financial weakness.”
On the FOMC statement, ADS Securities Analyst, Konstantinos Anthis suggested “The robust performance of the employment market is the number one reason why the Fed looks into the future with a positive bias so next month’s Non-Farm Payroll report will be key in shaping expectations.”
“The key question of course is whether the Fed will move forward and raise rates again in December and Fed Futures now indicate a 40% chance of that taking place. However, if for any reason the NFPs miss next week then these odds will decrease significantly and the Dollar will suffer further.”
US companies reporting today include Dow component Procter & Gamble, online retail colossus Amazon, social platform Twitter, coffee giant Starbucks and Telecoms giant Verizon.
“Note, Facebook traded higher in after-market hours following the announcement of a 71% profits surge while PayPal also topped estimates to trade almost 1% higher after hours.” added Mike van Dulken.