Yesterday’s bargain hunting has been replaced by broad uncertainty, as Janet Yellen’s latest appearance before US lawmakers looms. There are still reasons to be worried, even if the market seems remarkably unperturbed by another dive in Banco Espirito Santo shares, with the Bank of Japan’s decision to trim growth forecasts being one of the key concerns.
Closer to home UK consumer price growth bounced back, rising 1.9% year-on-year in June and sharply increasing the pressure on the Bank of England, while property prices rebounded as well. There will be a few economists revising their rate hike predictions this morning, as Threadneedle Street starts to look dangerously behind the curve. We can expect Mark Carney’s appearance before MPs this morning to be suitably informative.
Citigroup’s earnings were crucial last night in aiding the market rebound, but the focus moves on to Janet Yellen this afternoon. One thing is certain, her steely determination not to be drawn on the exact timetable of monetary policy will be firmly to the fore, even as she seeks to keep Congress happy with her answers.
Ahead of the open, we expect the Dow Jones to start just three points higher, at 17,058.