Spreadex Market Update
Carney stimulus comments send FTSE to 10 month highs, but pound suffers in face of potential rate cut
Considering we are exactly a week on from the Brexit referendum, and subsequent market panic, the fact that the FTSE has climbed all the way above 6500 for the first time since last August is staggering. The index was propelled to this 10ish month high by the promise of stimulus, including a rate cut, from the Bank of England. Understandably this news wasn’t greeted with unanimous cheer; cable, which had been teasing $1.35, plunged to $1.32 during Carney’s speech, though it has risen back to $1.33 during the early hours of today’s trading.
While undoubtedly remarkable the FTSE’s rise is still laden with caveats. The pound’s relatively reluctant gains (it’s still nowhere near its pre-Brexit highs) compared to the UK index’s explosive growth does put an asterisk against the latter’s recovery, as does the struggles of the predominantly UK-based FTSE 250 against the multinational FTSE 100. And, of course, we have barely finished chapter 1 of this Brexit saga, with leadership races, new governments and, most dauntingly, the actual exit from the EU still to come.
Setting aside the Brexit for just a minute Friday morning also brings with it a wave of manufacturing PMIs from across Europe. The UK figure it expected to drop to 50.0 from 50.1 last month, while the Eurozone-wide reading is forecast to remain unchanged at 53.6.
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