Despite the positive open the FTSE succumbed to the negative mood in the rest of Europe and on Nasdaq later in the day, on a mixture of concerns over the Fed rate cuts, US-China trade talks and in reaction to two major fallers that have weighed down the index.
Mexican mining firm Fresnillo (LON:FRES) plunged nearly 18% after it turned in weaker than expected earnings, showing a sharp drop in its sales of gold and silver, while utility Centrica (LON:CNA) clocked a 17% loss as it announced the departure of its chief executive Iain Conn. Investors were particularly wary of Centrica being left rudderless at the time when it is already fragile, given that the company made a loss of £446 million in the first half of the year.
US markets opened mixed as the earning season remains in full swing and a number of solid profit reports lifted the Dow Jones Industrial Average. However, the tech orientated Nasdaq was in decline ahead of Apple’s results which are due after the market closes.
The pound was significantly weaker, although it managed to bounce off the day’s lows as new PM Boris Johnson repeated his hard line message on Brexit. Sterling traded down 0.37% at $1.2172 against the dollar and was heading for parity with the euro following a message to European negotiators from the new Foreign Secretary yesterday. It then continued its decline in reaction to the PM’s comments to his Irish counterpart Leo Vardarkar that Britain will exit Europe at the end of October “no matter what”.
Fed policy meeting keeps bonds, currencies on tenterhooks
The Federal Reserve is in session today but the final decision on rates will not happen until Wednesday. There is an unusual amount of hand wringing going on for a relatively stable economy and given that the markets are as good as certain that the Fed will deliver a quarter point cut tomorrow. The anxiousness in the market is more the reflection of belief that the stock markets are close to their peaks and could turn at any point – and that an unexpected move by the Fed could provide that turning point.
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