Spreadex Market Update
BoE cuts UK forecasts; Eurozone sees fastest growth since 2013
The FTSE spent the morning edging back towards 7000, as the lowest unemployment rate since 2008 and better than expected wage growth inspired a bit of faith from investors. However, as expected it wasn’t all good news with the Bank of England cutting its growth forecasts for 2015 to 2.4% from the 2.9% estimated in January after that weak GDP figure at the end of April.
Overall Governor Mark Carney’s comments were unsurprisingly, downplaying the risk of deflation or a prolonged period of falling prices, whilst highlighting that there has been a ‘disproportionate’ increase in the creation of low productivity jobs that has contributed to the UK’s woeful performance this area and fending off accusations of inertia. The FTSE was unfazed by these comments; cable, on the other hand, took a bit of a knock even if it is still near 5 month highs, after Carney reaffirmed that the strong pound was one of the reasons for the lack on movement on UK interest rates.
The Eurozone had a strong morning despite a sharp slide in industrial production and a slightly lower than expected region-wide GDP figure. Regardless, the Eurozone is still seeing its fastest growth since the second half of 2013, and the news was reflected on the markets with the French CAC, not the DAX, leading the region’s rally this morning. However, under these positive figures did lay another unwelcome reminder of the region’s problems elsewhere, as Greece, the perpetual thorn in the Eurozone’s side, slide into a recession. Is this news surprising? No. Is it still worrying? You betcha.
Whilst Tuesday was beyond flat for the US markets, things are looking slightly better for the US futures this morning with the positive sentiment from Europe making itself felt on the Dow et al. An afternoon of retail figures and business inventories will be the focus for investors, with a healthy dose of earnings thrown into the mix with recent debutante Shake Shack announcing its first quarter earnings after the markets close.
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