Spreadex Market Update
Spectre of BoE ‘Super Thursday’ looms over FTSE this Thursday morning
Whilst rates will inevitably remain unchanged the focus will be on whether any of the 9 Monetary Policy Committee members vote for a cut this afternoon, with Andy Haldane and Gertjan Vlieghe the likeliest candidates for a walk on the dovish side. Beyond the headline rate vote the central bank will reveal its revised forecasts for the UK’s growth, and things don’t look pretty. Following on from the weak Q1 GDP estimate, the limp growth figures revealed by NIESR yesterday, and the sickly showing from the manufacturing and industrial sectors over the last few months, it is likely that the BoE will slash expectations for 2016 to 2% from 2.2%.
The potential for such a change in forecasts is already weighing on the FTSE this Thursday, the index slipping by 1.2% (and dipping below 6100) as the European trading session got underway. A crumbling commodity sector didn’t help matters, the likes of BP and Anglo American seeing notable drops despite the mild gains made by Brent Crude and copper.
Things weren’t any better in the Eurozone, with the DAX and CAC seeing their own 1%-plus drops this morning. Still to come is the region-wide industrial production figure, and given the issues seen across the continent in that area the number is unlikely to provide much cause for cheer, even if it does manage to creep out of negative territory to the expected 0.1%.
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