Carney concerned over potential rate rise delay

In-house arguing has seen optimism drain from eurozone equity markets while the commodity-heavy FTSE 100 has ploughed higher regardless. 

Mark Carney
Source: Bloomberg

Carney fears UK interest rate rise delay

The Bank of England governor, Mark Carney, has voiced his fears that the twin issues of low inflation and a strong pound could force the delay in the start of any proposed rise in interest rates for the UK. Currency traders have been pushing the start date for interest rate rises further down the road for some time and these comments will ensure that this mindset stays in place for a lengthy period. European diplomacy is being tested to breaking point as once again Yanis Varoufakis, the Greek finance minister, has gone on the front foot with his statement that the European Central Bank is 'asphyxiating' Greece. 

TSB, only recently stripped from Lloyds, has become the focus of frenzied bid speculation with news that Spanish bank Banco Sabadell is in discussions to take over the bank. Spain’s fifth-biggest bank is believed to value TSB at 340p ensuring the shares have jumped by almost 25%.

In the London markets pharmaceutical companies, AstraZeneca and Shire, added their weight to the FTSE climbers while this move was also joined by FTSE member in waiting Hikma Pharmaceuticals as it jumped by over 4%.

More encouraging noises coming out of China have helped the mining sector's stocks return to favour while energy stocks again felt pessimism creep in as both US light crude and Brent saw a selloff in the morning session.

ASOS is still recovering from 2014 - its own 'annus horribilis' where it has seen sentiment turn with the shares jumping 14% following news that overseas sales have helped prop up the online clothing retailer's figures.

Argos, relied upon for so long to make up for the less than inspiring performance at Home Retail Group, has failed to save the day. 

Dow up almost 200 points

US retail sales missed the mark by some distance while the unemployment claims unexpectedly shrank. Regardless of all the confusion, US equity traders have firmly moved back into a 'risk-on' mindset driving the Dow Jones up by almost 200 points in the first couple of hours' trading.

This template resembles the price action present in Europe yesterday as the attractions of the dividend-backed income yields on equities has proven to be too enticing to resist. The results of yesterday’s bank stress test have seen the financial stocks add to this bullish momentum regardless of the legacy issue that many still have with the US regulators.

Intel was the biggest name to buck this trend as it slashed its quarterly revenue forecast.  

False hope for copper

Gold is eyeing the $1150 mark again as we are less than one week away from the Federal Reserve meeting. The prospect of hawkish language from the Fed is all the more likely given the latest non-farm payrolls report. Gold is treading lightly as traders know full well once the word ‘patience’ is removed from the Fed's statements the lights will be turned out for gold.

High grade copper is climbing higher after speculation that China will loosen its lending policies to increase the flow of credit. Copper has been in decline for several months, and today’s rally is merely allows for some bargain hunting but downward trend will not be bucked.   

EUR/USD and GBP/USD hit fresh lows

Overnight Asian currency traders oversaw a squeeze in the dollar as both EUR/USD and GBP/USD hit fresh lows. As both had moved into aggressively oversold levels their European counterparts bought into the pound and the euro. Considering the size of the ECB’s monthly QE policy it is difficult to see anything other than renewed pressure on the euro. The squabbles between Greece and numerous other eurozone nations will no doubt add a little to those who view the euro as a currency under pressure.

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