The FTSE is up 20 points in early trading this Friday morning; thanks in part to the Pound’s fall following the Bank of England’s note of caution; and in part on the strength of the Mining sector on commodities gains.
The Pound’s fall has been sharp following the Bank of England’s interest rate rise yesterday. FxPro analyst, Edward Anderson commented “Whilst the rate hike was already “priced-in” by the markets GBP suffered losses of 1.8% against EUR and 1.5% against USD following the announcement.”
“Many attribute the downward pressure on GBP because of Governor Carney hinting that rates would rise twice more in the next 3 years, with rates edging up to 1% by the end of 2020. The future pace of rate rises is exceptionally slow and it is based on a relatively gloomy growth outlook which resulted in the markets selling GBP against its peers.”
However, Spreadex analyst, Connor Campbell had a note of optimism for the Pound, “One thing that could help cheer up sterling is the latest services PMI. Both its manufacturing and construction peers have beaten estimates this week, meaning there is some chance that October’s reading could avoid the forecast fall from 53.6 to 53.3 month-on-month.”
The Dollar, meanwhile, was unmoved by President Trump’s replacement for Janet Yellen in the Federal Reserve’s hot seat. There was little surprise when Jerome Powell was appointed as the next Federal Reserve Chairman on Thursday at the White House. Edward Anderson suggested “Under Mr. Powell’s leadership, the Fed will likely continue its projected path of raising its interest rate 3 more times next year, as well as continuing to pare back its massive Fixed Income portfolio.”
The first Friday of each month see’s Nonfarm Payrolls released and investors will be focused on the Dollar again today. “Market expectations for a strong number were recently re-enforced with the ADP National Report showing the US private sector hired 235K workers in October, the most in 8 months.” added Anderson.
US equity markets were mixed yesterday. The Nasdaq and S&P 500 closed around breakeven as investors digested a new Federal Reserve Chief and the proposed Republican tax reform plans.
Accendo Markets analyst, Mike van Dulken commented “The Dow Jones thundered to a new record closing high as heavyweights Boeing, Goldman Sachs and 3M led risers, while the S&P 500 also closed higher as the Financial sector rallied to offset Housebuilder underperformance. The Tech-focused Nasdaq closed just shy of breakeven.”
“Well-received Apple results overnight saw the world’s largest company rocket to fresh all-time highs after hours, as the iPhone maker pointed to a strong sales outlook, accentuated by the $1000 iPhone X, helping it briefly to a market capitalisation above $900bn.”
