Established in 1974
185,800 clients worldwide
Over 15,000 markets

Interest rates unchanged for 78th month in a row

European equities have spent all day in the red following yesterday’s sell off in US markets.

London Stock Exchange
Source: Bloomberg

The negative sentiment from yesterday’s poor US session has ensured that traders’ screens have been bathed in a red hue throughout the day. No doubt those overseeing the Trade Descriptions Act will be closely monitoring future ‘Super Thursdays’ as this has proven to be anything but.

Other than mortgage lenders, few in the financial markets have acted too strongly on the MPC’s implication that rates could change at the turn of the year. Certainly the recent economic releases from the UK and the committee’s voting give little support to this theory, with the UK GDP forecast being cut back. Throughout the accompanying statement the cooling Chinese economy and struggling oil prices have taken  the brunt of the blame as to why we are as yet unready to start the process of interest rate normalisation. 

Having now digested how the BoE perceives its ability to raise rates, attention will once again shift to the Fed; institutions still have December as the most likely month for this process to kick in but September still hovers as a distant possibility.

Yesterday’s price action in US equity markets demonstrated how fragile confidence is and with tomorrow seeing the Ecofin meeting in Brussels, plus US inflation figures and Michigan confidence data, it is difficult to postulate a solid reason for why buyers should step in on the last day of the week

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.