After gradually pushing higher in the last few sessions the Dow Jones got a rocket boost this Tuesday afternoon.
The Dow jumped 170 points after the bell, hitting a fresh all-time high of 23450 thanks to stellar third quarter releases from Caterpillar (up 6%), 3M (up 6%) and McDonald’s (which rose 1.4%). That bodes well for the rest of earnings season – a few more sessions like this and the US index could easily cross 24000 and beyond.
Beyond the Dow’s latest drive higher, the main news this afternoon was the intensification of sterling’s losses. Cable is down half a percent, taking the pound below $1.315, as a better than forecast pair of flash US manufacturing and services PMIs lifted the dollar. Against the euro – which has also been helped out by some decent PMIs – the situation was even worse, with sterling dropping under €1.12 following a 0.8% dive.
Of course the main reason for the pound’s problems is the increased uncertainty surrounding November’s Bank of England rate vote. What seemed at the end of summer like a locked on hike is now incredibly unclear, with MPC members Dave Ramsden and, most recently, Jon Cunliffe casting doubt on the UK economy’s ability to withstand an interest rate raise. (And that’s not to mention last week’s troubling wage growth and retail sales data backing up those claims.)
Investors will get another chance to assess the state of the UK economy with Wednesday’s preliminary Q3 GDP reading. Analysts are expecting the figure to come in at 0.3%, the same as in the second quarter – not the best news, then, for the pound.
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