After starting the day in the red, the FTSE briefly moved into positive territory before moving lower once again. Whilst a weaker pound offered support to the UK index, miners dragged. Oil majors managed to shrug off the tumbling price of oil thanks to impressive results from Shell (LON:RDSa).
Pound Slips On Balanced BoE Report
As expected, the MPC voted unanimously to keep monetary policy unchanged. The bank rate stays at 0.75% and the BoE will continue its bond buying programme at the current level of £435 billion. GBP/USD shifted lower in choppy trading.
There were no fireworks from the BoE. Instead a fine display of balancing positives and negatives. The central bank looked to be going out of its way to keep on an even keel.
- On the one hand, the BoE raised growth forecasts for 2019, 2020 and 2021. On the other, it cut inflation forecasts.
- It signalled that it was still minded to tighten monetary policy and that the path of hikes was steeper than what the market currently expects. Yet, Mark Carney & co. also said that they were in no rush with the cost of waiting low.
- Mark Carney highlighted the improving prospects for the global economy, whilst saying that domestic tensions remained elevated.
- Business investment was low and was expected to remain that way possibly leading to the longest decline in business investment in modern history. Yet companies are still hiring, and the labour market remains robust.
Super Thursday was not really that super, instead rather average with most positives balanced out with a negative. If the central bank was trying to leave the spotlight firmly on Brexit and the UK political scene they succeeded. Pound traders will shift their gaze back to cross party talks and the local elections.
The Bank of England report comes following a neutral stance from the Fed overnight. The Fed, poured cold water on the prospect of a rate cut, which lifted the dollar and sent US stocks sharply lower.
Today Wall Street has opened mixed. Banks on the up whilst energy stocks are weighing heavily.
Oil tumbles on US stockpiles
Oil has plummeted over 2.2% across Thursday as US stockpiles increased to their highest level since September 2017, jumping some 9.9 million barrels. Production hit a record level of 12.3 million barrels per day.
Outside of the US oil prices are well supported. OPEC continues to cut output, sanctions are tightening on Iran, the political crisis in Venezuela is worsening. These factors are providing a backdrop of tightening supply. However, concerns are growing that US production could ramp up further, and this is weighing on the price of oil.
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