The FTSE 100 is higher on the day after the Bank of England (BoE) governor Mark Carney stated there is no rush to increase interest rates. Traders were caught off guard last week when three members of the BoE voted to increase interest rates, but today Mr Carney dashed those hope by stating there will not be any rate hikes any time soon.
It would appear that the BoE chief wants to keep monetary policy loose as there is so much uncertainty surrounding the Brexit negotiations, which started yesterday. Some traders feel that Mr Carney was too aggressive in his easing of monetary policy in the awake of Brexit, and now it seems that he doesn’t want to increase interest rates in case he has to cut them again.
Persimmon (LON:PSN) and Taylor Wimpey (LON:TW) welcomed the comments from Mr Carney that interest rate in the UK won’t be rising any time soon, as the home builders are helped by low borrowing costs.
The pound is softer versus the US dollar and the euro after Mr Carney’s dovish comments. The clear message that the UK won’t be raising rates in the foreseeable future has sent sterling sliding. The pound could be in for future pressure as the Federal Reserve are keen to tighten their monetary policy, and there has been calls for the European Central Bank to rein in their loose monetary policy.
We are expecting the Dow Jones Industrial Average to open unchanged at 21,528, and we are calling the S&P 500 2 points lower at 2451.
The US will reveal its current account balance for the first quarter at 1.30pm, the consensus is for a deficit of $123.8 billion, and the previous quarter had a deficit of $112.4 billion. At 8pm Federal Reserve Bank of Dallas President Robert Kaplan is speaking in San Francisco.
FedEx (NYSE:FDX) and Adobe Systems (NASDAQ:ADBE) will announce their quarterly figures later today.
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