London: The pound continued its recent winning run yesterday, lifted by comments from influential MPC member Andy Haldane, who said interest rates could “edge up” if the cost of living continues to rise, says Mihir Kapadia – CEO and Founder of Sun Global Investments.
“These more hawkish comments follow a similar tone taken by BoE Governor Mark Carney on Wednesday in Portugal, despite the BoE being quite satisfied with the current rates. The relative strength of the pound, which is currently steady at the $1.30 mark, had dragged down the FTSE100 which is made up mainly of exporters by about 0.4 this morning before recovering.”
Friday’s markets have started off on a sluggish note, as the UK growth rate has been a disappointing 0.2% in the first quarter of 2017, compared to a 0.7% growth in the last quarter though in line with forecasts. Weaker consumer sentiment and rising inflation could well have been contributing factors as well as Brexit worries. Over in the US, major stock indexes slumped Thursday, as technology shares fell again.
The Dow Jones Industrial Average closed down 167.6 points, (- 0.8%), the S&P 500 lost 0.9% – their largest one-day declines in more than a month. The Nasdaq fell 1.4% having been 25 lowered at one stage, while in the S&P, all sectors except energy and financials fell. The latter rose 0.65% as investors responded further to the news that all 34 large banks had passed the Fed Stress Tests.
The negative sentiment towards stocks has continued in Asia with most indices lower. In Japan, the Nikkei fell below 20,000 for the first time in two weeks and is as down 0.92% as the yen rebounded against the US dollar. The worst performer however has been Australia’s S&P/ASX 200 which is down 1.66%.
The release of a better-than-expected official manufacturing PMI from China has helped the country’s stocks. The PMI index rose to 51.7 from 51.2 in May; a reading above 50 indicates expansion. Chinese stock benchmarks are flat at the time of writing.”