Spreadex Market Update
US rate-hike fears, commodity woes and rubbish Royal Mail results weigh on FTSE
There were a variety of reasons for the FTSE’s 1.4% fall this morning. The increased potential for a June rate-hike in the US, something multiple Fed members seemed open to in last month’s meeting minutes, has sent a ripple of fear through the market as a whole, whilst concerns over the missing EgyptAir plane are continuing to weigh on the travel sector. The commodities stocks are also looking rotten, with a sharp 5% drop from Royal Dutch Shell in light of Brent Crude dipping below $48 per barrel. Then there were ugly losses for key companies like Royal Mail, the postal firm slipping 4% as it revealed a wince-worthy 33% decline in annual profits amidst ‘challenging market’ conditions.
Interestingly there was some good news out of the UK economy. Smashing expectations retail sales for April surged to 1.3% (reflecting the arguably limited impact of BHS’ collapse), with March’s data revised up to -0.5% from -1.3%. This news gave the pound a big push, with sterling taking 0.3% off the dollar and hitting a 3 week high against the euro.
Whilst Europe has seen a nasty US rate-hike chatter-inspired decline this morning (the DAX and CAC joining the FTSE with 1.5% and 0.9% plunges respectively), the Dow futures aren’t quite as calamitous just yet. It looks like the US index will open just shy of half a percent lower after the bell, but with Philly Fed manufacturing index and jobless claims figures to come before the session begins. There are also speeches this afternoon from Fed vice-chair William Dudley and FOMC member Stanley Fischer, with investors likely keen to hear their take on the chances of a June rate-hike.
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