Central banks call the tune

Heading into the close the FTSE 100 is 30 points higher, putting the index on track for four days of gains.

Source: Bloomberg
  • Bank of England holds fire
  • European Central Bank minutes fail to excite
  • Markets await Federal Reserve minutes

Markets have been trapped in the headlights today, unsure which way to turn as a succession of central bank announcements come thick and fast. The Bank of England’s moment passed once again without incident, but caution on the growth outlook and the lack of any increase in the number of hawks on the committee means that a 2015 move is now a non-starter.

Even the first-half of 2016 looks like a long shot at this stage, barring some significant upturn in the global economy. Minutes from the ECB also provided but a temporary distraction, since we are still lacking the clear indication that QE across the Channel is to extend beyond September 2016.

Today’s FTSE leaderboard has a more diverse membership to it compared to yesterday’s mining-dominated bounce, but at present it still resembles opportunistic bargain hunting rather than any sustained rise in bullish sentiment.

Having risen over 5% in the past week, the FTSE 100 has worked hard to break out from its September malaise, but more gains will be hard to come by in the absence of any concrete good news.

The main event of the day, the Fed minutes, is still to come, but even here the impact may not be as great as thought. The account of the meeting will be filtered through the lens of last week’s poor jobs report, which will serve to diminish any hawkish message.

There is unlikely to be any sustenance for fans of more monetary easing either, with the result that this rally in global stocks could start to turn sour quite quickly.  

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