European markets firmed on Tuesday in what was basically an unwinding of yesterday’s modest losses ahead of BOE governor Mark Carney testifying before the Treasury Select Committee and investor confidence data from Germany.
Banking shares were amongst the top risers in UK stock markets in a read-across from Nationwide building society reporting a rise in full-year profits. Kingfisher (LON:KGF) shares flew higher after results showed sales increase in the three-months through April thanks to growth from its Screwfix trade outlet. Imperial Brands (LON:IMB) rose to top of the UK equity benchmark index, brushing off Axa’s divestment of its tobacco share holdings.
The British pound has seen a big move in the hours leading up to the Bank of England governor and officials’ appearance at parliament With the referendum now less than one month away, it will be Mr Carney’s last opportunity to lay out the central bank’s stance on Brexit. The BOE cut its cut its growth forecasts last month and lawmakers will be keen to probe how big of a factor the referendum was in that decision. BOE officials Kristin Forbes and Gertjan Vlieghe, who will also be at the hearing, have suggested the UK slowdown is not all Brexit-related.
Should Mr Carney make another bold case outlining the risks of a possible Brexit, that could be conceived as a boost to the Remain camp and support the British pound. If the BOE governor agrees with other officials that the UK economy is slowing in spite of the referendum, that could put pressure on Sterling.
The gain in equity markets came in spite of another fall in oil prices after Iraq announced its exports grew to a new record. Whether crude extends its recent losing streak will likely be determined by US weekly inventory and production figures reported tonight and tomorrow.
Markets are still awaiting the next major catalyst to force some movement. The FTSE 100 has been trapped in sideways motion between its 200-day moving average above and 6050 below for two weeks.
US stocks look set for a slightly stronger start ahead of the release of housing data and earnings from Hewlett Packard Enterprise Co (NYSE:HPE), AutoZone (NYSE:AZO) and Best Buy (NYSE:BBY).
USA pre-opening levels
S&P 500: 3 points higher at 2,051
Dow Jones: 34 points higher at 17,526
Nasdaq 100: 7 points higher at 4,362
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